Today a much younger customer base is eligible to purchase a credit card. The previous generation of college-goers rarely carried credit cards. In contrast, 76% of contemporary students have credit cards in their own names.
As a direct result, many food and soda vending machines in high schools and colleges accept both credit and debit cards. On the flip side, a study reveals that students owe an average balance of $2169 in credit card debt.
Students Prepaid Credit Cards V/s Regular Credit Cards
Some parents bypass giving their children credit cards by making them authorized users on their parents’ card. Students are advised to restrict card usage to emergencies. Unfortunately, for many kids the term emergency is broad enough to accommodate discounts at a mall or a weekend getaway at a ski resort.
Registering children as authorized users is counter-productive to the acquirement of the knowledge and experience needed to handle credit. Kids using their parents’ card do not realize the financial repercussions of their choices as the balance is repaid by their parents at the end of every month.
Common Features of Student Prepaid and Reloadable Cards
Money is transferred to a prepaid card (usually by a parent) over the phone, online from a checking / savings account through an ATM. The amount that can be charged on the card is limited to the deposit. Parents can usually limit the type of purchase. They can also restrict the amount that can be spent.
No Fee College Debit Cards
By allowing teens to access their card information they can be taught to monitor purchases, deposits and their balance. Student prepaid or debit cards usually do not charge any overdraft or late fee. There are no interest charges or over-limit charges. Credit checks are also eliminated within the scheme. The account holder is not held liable for a loss or theft which is reported promptly.
Limited Credit MasterCard and Visa Student Prepaid Cards
Both Visa and MasterCard offer prepaid and Reloadable cards for teenagers and college students. MasterCard launched the Allow Card while Visa released the Buxx Card for this particular client base. These cards are embedded with more features than regular gift cards and even debit cards. Both cards limit the amount that can be spent and the type of purchase that can be charged on the card.
Best Teen Credit Cards
Some cards even allow direct paycheck deposits to the card. Prepaid cards typically also provide money management information for teens. Additionally, the PayJr Visa Buxx Card offers an optimal allowance card and chore record-keeping system for pre-teenagers.
Drawbacks of Teen Prepaid Card
Prepaid Cards do not offer a complete financial education to students. They charge high fees but do not teach the cost of credit or the consequences of using it irresponsibly. They also do not help in establishing or rebuilding credit.