Have You Considered Applying For A College Credit Card?
Sep 15, 2008 Credit Card
As its name says a college credit card is simply a credit card which has been specifically designed for college students and is perhaps more commonly known as a student credit card. Student credit cards are meant to let students learn all about handling credit and to experience the benefits of credit cards early in their lives. Really, a student credit card is an introduction into the world of credit cards and, although a student may have had experience of using a supplemental card on a parent’s credit card account, it is the first credit card that the student will have had in his own name.
Effectively college credit cards work in precisely the same way as ordinary credit cards but with some differences which you need to know about. These differences arise because the credit card issuers are taking something of a risk by giving credit to people who will normally have no credit history and therefore they need to protect themselves against the increased chance of debt on college credit cards.
The first major difference is that credit card issuers 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 asking for credit, and will also require the responsible adult to stand as a guarantor on the account. In other words, should the student default on the card then the parent or guardian will be legally liable to make good on any 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 frequently fixed at between $500 and $1,000. The limit is also set at a fairly low level because the credit card companies consider this to be enough to meet the needs of the vast majority of college students.
Lastly, the credit card companies also cover their risk by fixing the interest rates on college credit cards a bit higher than normal to try to stop students from putting too much on their cards and to encourage them to keep their spending within the sum which they can afford to pay off each month.
On the surface student credit cards might not appear very attractive to those of us who are accustomed to handling standard credit cards but in reality they can be a very handy tool for teaching youngsters 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 extremely useful 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 college without a mixture of parental support, grants and scholarships, government loans, privately arranged loans and working part-time. This can be difficult enough in itself to manage and far too many students have problems dealing with this and finish up with no option but to refinance their loans, usually by making use of student loan consolidation. When we add a college credit card into the mix we could just be providing the straw that breaks the camel’s back.
Now, whether student credit cards are truly a good idea or merely another marketing ploy by the credit card issuers is something which you must judge for yourself however, whatever you feel, they are without question something which you need to approach with your eyes wide open if you are to avoid having to ask for debt assistance and repair your credit report history in the future.
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Source: Finance
September 15th, 2008 at 9:15 pm
Hello.
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thank you.