Are You Aware Of The Fact That You Can Apply For A College Credit Card?
Just as its name says a college credit card is a credit card which has been designed for use by college students and is perhaps more commonly known as a student credit card. The idea behind student credit cards is that they let students learn all about 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, although a student could have had experience of using a supplemental card on a parent’s account, it represents the first credit card which the student will have had in his own name.
In general terms student credit cards work in exactly the same way as ordinary credit cards but there are a few 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 people who will usually have no credit history and thus they need to protect themselves from the increased risk of debt on student credit cards.
The first significant difference is that credit card companies require that a parent or guardian co-signs the student’s card application, so that a responsible adult is aware that the student is applying for a line of credit, and will also require that parent or guardian to stand as guarantor for the account. So, if the student defaults on the card then the parent or guardian will be required to make good on the debt.
The second main difference with a student credit card is that the credit limit is normally set at a lower level than that seen on standard credit cards and is typically fixed at between $500 and $1,000. This limit is also set at a reasonably low level because the credit card companies consider this to be high enough to meet the needs of most college students.
Lastly, card issuers also offset their risk by fixing the interest rates on student credit cards a bit higher than usual to try to stop students from putting too much on their cards and to persuade them to maintain their spending within the amount which they can afford to pay off each month.
At first sight college credit cards may not appear very attractive to people who are used to using standard credit cards but in reality they can be a very handy tool for teaching young people to manage credit responsibly and carry the additional benefit of giving student the ability to start to build up 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 very few students who will make it through college 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 being forced to refinance their loans, generally 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 for some students.
Whether or not student credit cards are a truly good idea or simply another marketing ploy by the credit card issuers is something which you will have to judge for yourself however, whatever you feel, they are unquestionably something which you need to approach with both eyes open if you are to avoid having to ask for debt assistance and repair your credit report history at some point in the future.
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