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What Is A College Credit Card

Feb 10, 2008
Most students are probably allowed to use extension or supplementary credit cards linked to any of their parents' personal accounts when they go to college, but having a college credit card for their own use is just a step towards independence.

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.
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