Young People Embrace Prepaid Cards As Financial Tools
When sending kids off to college, parents have plenty to worry about. One of the main things, besides whether their children will study hard and make good grades, is whether their kids will make wise financial decisions. Managing a budget, possibly for the first time, is a challenge.
One way parents are dealing with this worry is to give their kids prepaid cards. The Network Branded Prepaid Card Association (NBPCA) says more and more young people – and their parents – are embracing prepaid cards as a way to lean about financial management safely.
“More and more young adults are recognizing the benefits of prepaid cards, including helping them to manage money and participate in our card-based economy,” said NBPCA president Brad Fauss. “As the market expands with new product offerings, consumers have a wide range of prepaid options to choose from, making it easier than ever to find an account that fits their needs.”
The great thing about prepaid cards as far as parents and kids are concerned is that parents can load money onto the card and then when it’s gone, it’s gone. No debt can possibly be incurred from using a prepaid card. In that way, it’s like giving cash to your child. Only it’s better, because parents can see exactly where the money is going by tracking it online via account management tools.
Parents can deposit money onto a card, and then transfer it back to their own account if they decide the student has access to too much money. There is always the potential for kids to waste money, but if they can see exactly where their money is being spent by using online account access, or even an app on the phones – so ever present with today’s young folks – the temptation to overspend might be less. In any case, blowing all the money on your prepaid card and ending up with zero is a good way to learn financial responsibility.
Pros and cons
Prepaid cards don’t report to credit bureaus, which means your child won’t establish a credit history by using a prepaid card. For that, you’d need to get an unsecured regular student credit card for your kid. That can be considered a con, though a small one.
The big pro of a prepaid card is the convenience of using a card, the many online or app-based features of the card, and the potential for your child to learn about money without getting into too much trouble.