For parents wishing to teach their college bound children about properly budgeting money, or for parents who simply want to provide a safety net for their children in the event of financial emergences, student prepaid credit cards may provide some much needed relief. While normal credit cards may prove to be an unnecessary temptation for most young people unaccustomed to using restraint in their spending, prepaid student credit cards force students to adhere to a strict spending limit which eliminates much of the risk.
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A prepaid credit card works a lot like a customizable gift card, only it can be used almost anywhere. It works rather simply. When the credit account is opened, the amount of the deposit becomes the credit limit. When the credit limit is reached, no further purchases can be made on the card until more money is deposited into the account. This means that there are no overdraft fees. There are no interest rate charges on any of the purchases made with the credit card, no late fees and the cardholder does not receive a monthly bill. Most providers do, however, charge fees on the opening and depositing of any new funds to the account which may seem troublesome at first, but in the long run any fees accrued from this practice are comparatively smaller than those which would accompany a regular credit card used improperly over time.
One of the many advantages of using the prepaid card is its ability to work with online and over the phone bill pay options which can provide a lot of convenience to busy students and their parents. Many sites even allow the cards to be used in their automatic bill pay programs which means that once properly budgeted cardholders can have the ease mind of knowing that there bills will be paid on time whether they remember to get to them or not.
Prepaid student credit cards also provide parents with plenty of access to information on their child’s spending habits. Not only do they track all transactions made with the cards but some companies even provide SMS text message updates and e-mail notifications on recent activities. These include currents balances and all loads to made to card keeping both parents and their children informed on the amount of funds present in the account at all times.
The card also provides a safe alternative to carrying around cash. Should the card ever be lost or stolen, it can easily be canceled.
Should parents or the students ever feel the need to add more funds to the account, multiple options are available for making a deposit to the card. These range from depositing directly out of your banking account to visiting a physical location.
It is good to keep in mind that unlike regular credit cards, prepaid credit cards aren’t an effective means of building credit since they never actually extend credit in the first place. They do, however, in many ways protect students from hurting their credit through erroneous activities and provide the basis for learning to budget money that could be later extended into the use of a regular credit card when they feel they are up for the responsibility. All and all, a prepaid credit card is an option that deserves much consideration on both the student and their parent’s part.
Click Here for Student Credit Card Options
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