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Just as its name would suggest a college credit card is simply a credit card which has been specifically designed for use by college students and is perhaps more commonly known as a student credit card. Student credit cards are meant to allow students to learn all about handling credit and to experience the benefits of credit cards early in their lives. In reality, a college credit card is an introduction to the world of credit cards and, even though a student could have experienced using a supplemental card on a parent’s account, it represents the first credit card that the student will have had in his own name.

Generally speaking college credit cards work in exactly 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 allowing credit to people who will frequently have no credit history and therefore they need to protect themselves against the higher chance of debt on student credit cards.

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

The second major difference with a college credit card is that the credit limit is generally set at a lower level than that seen on standard credit cards and is typically fixed at between $500 and $1,000. The limit is also set at a relatively low level because the card issuers consider this to be high enough to meet the needs of most college students.

Lastly, the credit card companies also cover their risk by fixing the interest rates on college credit cards a little higher than normal to try to deter students from putting too much on their cards and to encourage them to maintain their spending within the amount that they can afford to pay off every month.

At first sight college credit cards may not seem terribly attractive to those of us who are used to handling standard credit cards but in fact they can be a very useful tool for teaching youngsters to manage credit responsibly and carry the added benefit of giving student the ability to start to build up a good credit record, which will be very helpful once they have left college.

College is an extremely expensive time for most students and there are not many students who will make it through college without a mix of parental support, scholarships and grants, federal loans, privately arranged loans and a part-time job. This is difficult enough in itself to manage and far too many students have problems coping with this and end up with no option but to refinance their loans, often by making use of student loan consolidation. If we now add a student credit card into the equation we could merely be providing the straw that breaks the camel’s back.

Whether or not student credit cards are a truly good idea or simply another marketing ploy by the credit card issuers is something that you must judge for yourself but, whatever you decide, they are unquestionably something you must be approached with both eyes open if you are to avoid needing to seek credit card debt help and repair your credit report history in the future.

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