Just as its name implies a college credit card is a credit card that has been specifically designed for college students and is perhaps more commonly known as a student credit card. Student credit cards are meant to allow students to learn all about handling credit and to experience the benefits of credit cards early in their lives. In effect, a student credit card is an introduction into the credit card world and, although a student could have had experience of using a supplemental card on a parent’s account, it represents the first credit card that the student will have in his own right.

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

The first main difference is that credit card issuers require a parent or guardian to co-sign 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 that responsible adult to stand as guarantor for the account. So, should the student default on the card the parent or guardian will be required to make good on the debt.

The second significant difference with a student credit card is that the credit limit is usually set at a lower level than that seen on standard credit cards and is typically set at between $500 and $1,000. The 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 offset their risk by fixing the interest rates on student credit cards a little higher than usual in an attempt to deter students from overspending on their cards and to persuade them to keep their spending within the sum that 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 normal credit cards but in fact they can be a very handy tool for teaching young people to manage credit responsibly and have the additional benefit of providing students with the ability to start to build up a good credit record, which they will find very useful once they leave college.

College can be a very expensive time for many students and there are only a few students who will make it through a college education 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 coping with this and finish up being forced to refinance their loans, generally through student loan consolidation. If we add a credit card into the mix we could just be providing the straw that breaks the camel’s back.

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