Just As its name says a college credit card is a credit card which has been designed for use by college students and is possibly more commonly known as a student credit card. College credit cards are meant to let students learn all about handling credit cards and to experience their benefits early in their lives. Effectively, a college credit card is an introduction into the world of credit cards and, even though a student could have had experience of using a supplemental card on a parent’s credit card account, it is the first credit card which the student will have had in his own name.

Effectively college credit cards operate in precisely the same way as other credit cards but with some differences which you have to know about. These differences arise because the credit card companies are taking something of a risk by extending credit to individuals who will normally have no credit history and thus they need to protect themselves against the increased risk of debt on college credit cards.

The first major difference is that credit card companies require that a parent or guardian co-signs the student’s application for a card, so that the parent or guardian knows that the student is applying for a line of credit, and will also require that parent or guardian 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 important difference with a college credit card is that the credit limit is usually set at a lower level than that seen on normal credit cards and is normally set at between $500 and $1,000. The limit is also set at a reasonably low level because this is considered to be enough 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 usual in an attempt to stop students from overspending on their cards and to persuade them to keep their spending within the amount which they can afford to pay off each month.

On the surface college credit cards may not appear terribly attractive to people who are accustomed to handling standard credit cards but in reality they can be a very useful tool for teaching young people 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 after leaving college.

College can be a very expensive time for most students and there are very few students who will make it through college without a mix of parental support, grants and scholarships, government loans, private loans and working part-time. 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, usually by using student loan consolidation. When 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 college credit cards are really 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 undoubtedly something you must be approached with both eyes open.