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Oct
18

Did You Know That You Can Have A College Credit Card?

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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 possibly more commonly known as a student credit card. The idea behind college credit cards is that they let students learn all about credit cards and to experience their benefits early in their lives. Really, a college credit card is an introduction to the credit card world and, even though a student could have had experience of using a supplemental card on a parent’s credit card account, it represents the first credit card that the student will have in his own right.

In general terms student credit cards work in precisely the same way as normal credit cards but with some differences which you need to understand. These differences occur because the credit card issuers are taking something of a risk by allowing credit to people who will often not have any credit history and therefore they need to protect themselves from the increased chance of debt on college credit cards.

The first major difference is that the credit card issuers require a parent or guardian to co-sign the student’s card application, so that the parent or guardian knows that the student is asking for credit, and will also require that responsible adult to stand as a guarantor on the account. Thus, if the student defaults on the card then 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 other credit cards and is typically fixed at between $500 and $1,000. This limit is also set at a relatively low level because the credit card companies consider this to be sufficient to meet the needs of most college students.

Finally, card issuers 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 keep their spending within the amount that they can afford to pay off every month.

On the surface student credit cards may not appear very attractive to people who are used to using standard credit cards but in fact they can be a very useful tool for teaching young people to handle credit responsibly and have the additional benefit of providing students with the ability to start building a good credit record, which will be very helpful after leaving college.

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

Whether or not college credit cards are a truly good idea or just another marketing ploy by the credit card companies is something that you will have to judge for yourself however, whatever you decide, they are certainly something which must be approached with your eyes wide open if you are to avoid having to seek credit card debt help and repair your credit report history in the future.

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    September 18, 2010 at 3:41 am (UTC -6)

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  3. Did You Know That You Can Have A College Credit Card? | Free Credit Report Information says:

    October 18, 2008 at 3:35 pm (UTC -6)

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