College credit cards are popularly known as student credit cards and these are specially designed for college students. This is a big advantage for them because through this they can enjoy the benefits of making transactions using plastic very early in life. This is a way of introducing and initiating the students into the real world of credit cards, opening their eyes into understanding the concept of this piece of plastic money, its uses, benefits and its pitfalls, too.
College credit cards functions the same way regular cards do, except that these are issued by card companies to students who never had any plastic money before. In fact, this is the very first card students get that they have total control of.
With this in mind, the card suppliers are risking their business in issuing cards to students who may not have a clear understanding of the whole concept yet. It is just like trusting your finances to a complete stranger whom you know nothing about his credit history.
Holders of college credit cards can be considered as a business risk because the respective card companies cannot be sure if you will meet your bill payments on time. To protect their business interest, credit card companies initiate some measures like asking your parents to counter-sign the application form as a guarantee that in case you will default your payments, they can go to your parents to collect what you owe them. This is security on their part.
There is also a lower credit limit to students. This could be less than 1,000 USD a month, an estimate the card companies see as adequate to meet a student's needs. This is a good training indeed for the students to practice disciplining themselves in handling their finances; to learn the valuable lesson of not spending more than what they can pay for.
Students must also be aware that there is a higher interest rate on the college credit cards compared to the other regular cards. This is done with a purpose because the card companies and suppliers want to make the students aware of the dangers of overspending on their credit limit. They may not be aware of it but bills pile up faster when you go on a buying spree every now and then. The credit card companies want to teach the card holders that they should control their spending.
Indeed, having a college credit card is a hands-on training into the actual world. When the students go out into the real world, they are already well-oriented and know what to do. This piece of plastic is indeed something that college students should have because it will teach them valuable lessons about spending and budgeting.
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 important difference is that credit card issuers require that a parent or guardian co-signs the student's card application, so that the parent or guardian is aware that the student is asking for credit, and will also require the responsible adult to stand as guarantor for the account. Therefore, if the student defaults on the card then the parent or guardian will be required 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 typically set at between $500 and $1,000. The limit is also set at a reasonably low level because the card issuers consider this to be adequate to meet the needs of most college students.
Lastly, card issuers also cover their risk by setting the interest rates on college credit cards a little higher than usual in an attempt to stop students from putting too much on their cards and to persuade them to keep their spending within the amount which they can afford to pay off each month.
At first sight college credit cards might not appear very attractive to those of us who are accustomed to handling normal credit cards but in reality they can be a very handy tool for teaching youngsters to handle credit responsibly and carry the added benefit of providing students with the ability to start to build up a good credit record, which they will find very useful once they have left college.
College can be a very expensive time for a lot of students and there are not many students who will make it through college without a mixture of parental support, scholarships and grants, federal loans, privately arranged loans and working part-time. This can be hard to manage and far too many students have problems dealing with this and end up with no option but to refinance their loans, generally through student loan consolidation. When we add a credit card into the equation we might just be providing the straw that breaks the camel's back.
Whether or not college credit cards are truly a good idea or just another marketing ploy by the credit card issuers is something which you will have to judge for yourself however, whatever your view, they are without question something you must be approached with your eyes wide open.
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