Credit Offer Online - Prepaid Student Credit Card

Prepaid Student Credit Card

Before your child goes off to college, it might be a good idea to sit down and talk to him about finances. Then give him a prepaid student credit card, explain what it's for, and what the limitations are.

Conversations

You're moving your son into his dorm so he can start his freshman year at Any State University. You decide to sit him down and talk to him about finances and present him with a prepaid student credit card. His reaction: "Wow! Thanks dad!" From the excitement, you can see visions of iPods dancing in his head. So you quickly explain the purpose of it.

"Now son, don't get so excited. This isn't meant to be all 'fun money.' You don't know it yet, but things are going to come up this semester that you don't expect. For the first time, you'll have to buy your own soap, deodorant, shampoo and all that sort of thing. And we realize that once in a while you're going to want to go out to eat with your friends or order a pizza or something. So we're giving you this prepaid student credit card to help you out with some of these things since you won't be working."

"What's the limit?"

"We only put $500 on it for the semester. Now, you're going to have to learn to budget that $500 wisely. This isn't like a credit card. With credit cards, when you go over the limit, you get charged an over-the-limit fee the first time it happens, but the next transaction you try to make will likely be denied. With a prepaid student credit card, when you run out, it's over. So if you're out with your friends and trying to look like the good guy by picking up the tab on your pizza, and you know you've only got $25 left on the card, you're probably going to be embarrassed because the card will be declined. It's almost like a debit card. You only have so much money you can draw out of your bank account before there's none left. At that point, the card is declined."

"Thanks dad. This will really help. I wasn't able to save as much money this summer from my job as I had hoped."

"Well, your mother and I suspected that. At the same time, we don't expect you to be spending this money on alcohol and going out to eat all the time. You have the dining hall for meals. It's okay to go out once in a while, but if you start going out more than your mother and I, we'll talk. The statements are mailed to us, and I can view the statement online as well."

"But what if I have a date?"

"We'll worry about that when the time comes. Your main concern should probably getting a haircut first."

"Can I get cash with a prepaid student credit card?"

"Yes, but the fees come out of the balance. And be careful--you'll probably find that you'll go through cash pretty fast if you don't watch it."

Hopefully this student will keep his spending in check with his prepaid credit card. There are lessons to be learned about finance along the way, but that's one thing prepaid student credit cards are good for.