Did You Know That You Can Have A College Credit Card?
As its name would suggest a college credit card is simply a credit card which has been specifically designed for college students and is possibly better known as a student credit card. Student credit cards are meant to let students learn all about credit cards and to experience the benefits of credit cards early in their lives. Effectively, a student 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 account, it is the first credit card which the student will have had in his own name.
Effectively student credit cards operate in precisely the same way as normal credit cards but with a few differences which you need to know about. These differences occur because the credit card issuers are taking a risk by offering credit to individuals 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 significant difference is that credit card companies require a parent or guardian to co-sign the student’s application for a card, so that a responsible adult knows that the student is asking for credit, and will also require that responsible adult to stand as a guarantor on the account. In other words, should the student default on the card the parent or guardian will be legally liable to make good on any debt.
The second major difference with a student credit card is that the credit limit is usually set at a lower level than that seen on other credit cards and is usually set at between $500 and $1,000. This limit is also set at a relatively low level because the card issuers consider this to be adequate to meet the needs of most college students.
Finally, card issuers also cover their risk by setting the interest rates on student credit cards a little higher than usual in an attempt to stop students from overspending on their cards and to encourage them to keep their spending within the sum which they can afford to pay off every month.
On the surface student credit cards may not seem terribly attractive to people who are accustomed to using normal credit cards but in fact they can be a very handy tool for teaching youngsters to handle credit responsibly and carry the additional benefit of providing students with the ability to build up a good credit record, which will be very helpful once they have left college.
College is an extremely expensive time for many students and there are very few students who will make it through a college education without a mixture of parental support, scholarships and grants, government loans, private loans and a part-time job. This can be difficult to manage and far too many students have problems coping with this and finish up with no option but to refinance their loans, frequently by making use of student loan consolidation. If we add a college credit card into the mix we might simply be providing the straw that breaks the camel’s back for some students.
Now, whether college credit cards are a truly good idea or merely another marketing ploy by the credit card companies is something which you will need to judge for yourself however, whatever you think, they are certainly something which you need to approach with both eyes open if you wish to avoid having to ask for help with debt problems and repair your credit report history at some point in the future.
Tags: borrowing, college, credit, credit card, credit card debt, debt, Finance, student, undergraduate, university
