Credit Cards Basics for College Students

More and more teens and college students have credit cards. Like the population at large, some have good deals and some don't.

Credit card companies target these groups because they are a fast-growing segment of the population and they have money to spend. So it's no surprise when a high schooler or a college freshman receives piles of offers.

If you're a college student, or the parent of a college student, Bankrate.com can help you find the best credit card deals. Just go to our student credit card survey.

You'll see rates that are generally higher than normal cards. Look carefully, because while these cards are easy to get, the card companies commonly offer them with heftier fees and interest rates, as well as smaller credit limits.

Parental responsibility
Student credit cards are easy to get because parents are often obliged to back up their children in the event the child runs a little short. Even if they aren't legally obligated to, parents commonly come to the rescue and pay those bills. So parents, make sure you read all the terms, especially with co-signed cards. You'll probably be there for the children, but it's nice to know the rules beforehand.

Which brings up another golden rule: Students should use the cards only for emergencies. (Pizza is not an emergency.) Otherwise they're paying high premiums for everyday purchases, running the risk of damaged credit and learning some bad credit habits at an early age.

Consider voluntary limits
Consider putting a voluntary limit of less than the card company will allow. After all, if the card is used for emergencies only, you don't need all those thousands of credit dollars out there tempting you.

If a young person has a credit history and can qualify for a regular credit card, it may work out to be a better deal. (Pizza still is not an emergency.)

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Sending Your Child Off to School? More Stories from Bankrate.com:

• Bankrate's Student Credit Card Survey
• Compare College Loan Rates
• Student Loan Forgiveness: Rare But Possible

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All students and teens should remember that credit cards are a stepping-stone to a solid credit history -- something of major importance to their futures. Misused, they can add a mark on their credit records that will take years to erase.

Security with secured cards
Secured cards are another option for teens and students. Banks commonly offer these products, which are cards where the cardholder puts money in the bank as security. That money guarantees the card issuer will be paid if the cardholder fails to pay the bills. The credit limit is determined by how much is secured in the bank as collateral.

There are also cards available that allow parents to link a child's card to the parents' accounts, or let them keep refilling the teen's or student's accounts as they go along. It's a way to keep up with what's going on and limit spending, but still provide the freedom and convenience of a card.

Parents also need to be careful in case teens apply for and receive credit cards without the parents' knowledge. It's not supposed to happen to anyone under 18, but there is ample anecdotal evidence of people far younger filling out forms and getting their cards.

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