All parents know that at some point they will have to teach their kids about using credit cards. Using credit wisely can be a tough financial subject to teach because we all know what happens if you buy more than you can pay off. The consequences are rough - high interest, paralyzing debt, and loss of freedom.
So when it comes to finding the right credit card for students, a little extra thought and teaching will go a long way to helping your kids learn about the importance of financial responsibility.
Prepaid Credit Card For Students
One great way to teach kids about using money responsibly is to start first with a prepaid credit card, which is actually a debit card, similar to a gift card. The card can be loaded by a parent with money directly from the parent’s checking account, a mobile phone, a credit card or with an online transfer.
These cards can be used anywhere credit cards can be used, without the danger of overdraft fees common to debit cards and high interest rates on credit lines.
Great for Allowance and Budgeting
One of the best parts about a prepaid spending card is that you can set up recurring payments for your student. This is perfect for allowance or payment for extra chores around the house.
Having a set amount that comes in regularly gives your teen the ability to learn about financial responsibility while having the flexibility to use the money you have allotted to them with some personal choice. This give and take as they make a variety of decisions, good and bad, will help your student learn important financial lessons without the severe consequences that will come later in life when they have more money to lose.
Convenient Phone Apps
Another great thing about the prepaid student card is that there are iPhone and Android apps available for the accounts to help you keep up with your teens spending. You can see what they have purchased, where they purchased it, and how much is left on their card. It’s a great way to keep an eye on things while giving your student the freedom of not having to ask you about every little purchase.
You can even plan a monthly session to review their spending with them and help them see where they could have made different decisions to manage their money better.
Another great feature of prepaid cards for students is the ability for both you and your teen to stay connected with all purchases in real time. When you activate text alerts, you will be able to see your teens most recent purchases, and you’ll both be alerted if the card is used unauthorized. You can also lock their card by simply sending a text message through the system.
This is perfect for situations where the card has been misplaced, or if you want to block their spending for a disciplinary reason.
Credit Card Networks
One great thing about a prepaid credit card is that your teen will have the ability to shop at hundreds, even thousands, of vendors near you, through the credit card network stamped on their card.
The prepaid student cards have an extra level of security as well, because they cannot be used at merchants that are deemed by the company to be inappropriate for teenagers, such as gambling online, alcohol purchases, and more. This feature gives you that extra level of help in your parenting efforts to teach your student about money management.