Generally speaking college credit cards operate in precisely the same way as other credit cards but there are a few differences which you need to know about. These differences occur because the credit card companies are taking a risk by allowing credit to people who will normally have no credit history and therefore they have to protect themselves from the increased chance of debt on college credit cards.

The first main difference is that the credit card issuers require a parent or guardian to co-sign the student’s card application, 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, if the student defaults on the card the parent or guardian will be required to make good on the debt.

The second significant difference with a college credit card is that the credit limit is generally set at a lower level than that seen on standard credit cards and is frequently set at between $500 and $1,000. The limit is also set at a reasonably low level because this is considered to be adequate to meet the needs of the vast majority of college students.

Finally, the credit card companies also cover their risk by setting the interest rates on student credit cards a little higher than usual in an attempt to stop students from overspending on their cards and to encourage them to maintain their spending within the amount which they can afford to pay off each month.

On the surface college credit cards might not appear terribly attractive to those of us who are used to handling normal credit cards but in reality they can be a very useful tool for teaching young people to handle credit responsibly and have the additional benefit of providing students with the ability to start to build up a good credit record, which will be extremely useful after they have finished college.

College is a very expensive time for most students and there are only a few students who will make it through a college education without a mixture of parental support, grants and scholarships, government loans, private loans and a part-time job. This can be difficult to manage and all too many students have problems dealing with this and end up with no option but to refinance their loans, usually by using student loan consolidation. If we add a college credit card into the equation we might merely be providing the straw that breaks the camel’s back for some students.

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