• Have You Considered Applying For A College Credit Card?

  Filed under Credit Card Debt
  Oct 11

  Just as its name would suggest a college credit card is simply a credit card that has been designed for use by college students and is possibly more commonly known as a student credit card. The idea behind college credit cards is that they allow students to learn all about credit cards and to experience the benefits of credit cards early in their lives. Really, a college credit card is an introduction to the world of credit cards and, even though a student may have had experience of using a supplemental card on a parent’s credit card account, it is the first credit card that the student will have in his own right.

  Effectively college credit cards operate in precisely the same way as normal credit cards but with a few differences which you have to know about. These differences occur because the credit card issuers are taking a risk by giving credit to people who will usually have no credit history and therefore they need to protect themselves against the higher risk of debt on student credit cards.

  The first main difference is that credit card issuers require a parent or guardian to co-sign the student’s card application, so that a responsible adult knows that the student is asking for credit, and will also require that parent or guardian to stand as a guarantor on the account. Thus, if the student defaults on the card the parent or guardian will be legally liable to make good on any debt.

  The second major difference with a college credit card is that the credit limit is normally set at a lower level than that seen on normal credit cards and is typically set at between $500 and $1,000. This limit is also set at a relatively low level because this is considered to be adequate to meet the needs of the vast majority of college students.

  Finally, card issuers also offset their risk by fixing the interest rates on college credit cards a bit higher than normal to try to stop students from putting too much on their cards and to encourage them to keep their spending within the sum which they can afford to pay off every month.

  At first sight student credit cards might not seem terribly attractive to people who are accustomed to handling standard credit cards but in fact they can be a very handy tool for teaching young people to manage credit responsibly and carry the additional benefit of providing students with the ability to start building a good credit record, which will be very helpful after they have finished college.

  College can be an extremely expensive time for many students and there are very few students who will make it through college without a mix of parental support, grants and scholarships, government loans, privately arranged loans and working part-time. This is hard to manage and far too many students have problems coping with this and end up being forced to refinance their loans, often by making use of student loan consolidation. If we now add a student credit card into the mix we could just be providing the straw that breaks the camel’s back for some students.

  Whether or not student credit cards are truly a good idea or just another marketing ploy by the credit card companies is something which you will have to judge for yourself but, whatever your view, they are without any doubt something which you need to approach with your eyes wide open if you wish to avoid needing to seek debt assistance and repair your credit report history at some point in the future.

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