The market is quick to adapt when a product doesn't quite work for a demographic.  For example, putting traditional credit cards in the hands of college students has resulted in sky-high debt and fuming parents.  In response, credit card companies have introduced student credit cards.

If you're a typical parent of a college-bound student, you're probably a little on edge.  At some point, your child must leave the nest, but it's hard not to worry about her out there alone in the cold, cruel world.  

Fortunately, one new product on the financial marketplace can allay some parental fears.  It's the student credit card, and was created in response to the irresponsible use of traditional credit cards by college students during the last several years.  

Program parameters

A lower credit limit is a top feature of the student credit card.  Instead of throwing a very tempting credit line of $10,000 at a cash-poor college undergrad, the student card makes her prove that she can handle a bigger limit.  The initial credit line generally ranges from $500 to $1,000, and will be increased once the cardholder displays a good track record.

To help mitigate risk on their end, the credit card companies usually charge a higher interest rate.  To further limit the exposure of these financial organizations, they require a co-signer for student cards.  Generally, it's a parent or a guardian who agrees to help pay the balance if the youth can't make the payments.  This back up comes at a price for the user-credit limits will only be raised if the co-signer gives his approval.

Shopping for a card

When a student shops for a credit card, he should gather as much information as possible from different companies.  The shopper will want to carefully compare the variety of features, including:

• APR (Annual Percentage Rate): This number is calculated to include the cost of the interest rate, and any credit card fees and charges.  It provides a fairly close "apples-to-apples" comparison between cards.
• Fee: There are all types of fees involved with a credit card, including ones for late payments, cash advances, and yearly service and finance charges.  Every card charges different fees, so make sure that you understand them all.

Emergency cash and tracking

The student credit card is an excellent source of emergency cash for students.  With its moderate credit limit, it provides enough cash to get a student through a tough bind.  Credit card companies also create itemized expenditure reports, so that co-signers can see just where the money is being spent.  

With the student credit card, the market has produced a nice transitional financial tool.  Not only does it instill responsibility and good spending habits in college-age kids, it can provide them with cash in a crunch.  It helps young people avoid the credit card debt that has impaired the financial power of so many students before them.  This breath of fresh air in the credit card marketplace is helping many parents breathe a sigh of relief.