Teach Your College Student Financial Responsibility With A Credit Card

student financial responsibility with a credit cardAll 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.

Text Alerts

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.


    • DC @ Young Adult Money

      DC @ Young Adult Money 07/25/2013 6:49 a.m. #

      Great advice Sicorra! When I have kids I definitely would be interested in something like this. Seems like a good introduction to credit cards without actually giving them one.

      • Sicorra

        Sicorra 07/25/2013 12:21 p.m. #

        Thanks! I think it is a cool idea, and it helps that you can so easily monitor where you kids are spending too.

    • Christy Garrett @ Uplifting Famiilies

      Christy Garrett @ Uplifting Famiilies 07/25/2013 7 a.m. #

      Great information. Companies target college students and they end up misusing their credit card. Most teens or young adults feel as if credit cards are similar to free money.

      • Sicorra

        Sicorra 07/25/2013 12:23 p.m. #

        Yes, that does happen Christy. Hopefully if a family used these types of cards as a lesson in finances it would eliminate some of that for their kids when they grow up.

    • krantcents

      krantcents 07/25/2013 9:01 a.m. #

      Good points, but I prepared my children for credit cards by involving them in my finances. I was so confident that they were responsible, I gave them my card to use in college. They could only use it for books and emergencies. They never abused it.

      • Sicorra

        Sicorra 07/25/2013 12:24 p.m. #

        You are definitely one of the lucky ones!

    • Brian @ Luke1428

      Brian @ Luke1428 07/25/2013 11:43 a.m. #

      This is solid advice for college kids how to learn to use credit wisely. It's a dangerous financial time for them, being away from home and on their own for the first time. I'm going to be one of those crazy parents though that teaches my kids not to use credit cards at all. :)

      • Sicorra

        Sicorra 07/25/2013 12:26 p.m. #

        Sounds like you have a very good proactive plan Brian. Fingers crossed that it works well and saves them a ton of grief later in life.

    • Tanya @ The Heavy Purse

      Tanya @ The Heavy Purse 07/25/2013 11:55 a.m. #

      I actually didn't get a credit card until after college. Most of my friends didn't have them and those who did had pretty low limits on them. Now days I think college students are heavily targeted and get higher credit amounts than they gave back when I was in college (more year than I will admit to!). I do think it's smart to teach kids prior to heading off to college how credit cards really work. I remember when I was young, I really didn't understand how they worked but they seemed so ultra glamorous until I had a sibling max out their card. So many kids rack up huge debt without truly understanding the damage they are doing. This is a great way to help prevent that from happening.

      • Sicorra

        Sicorra 07/25/2013 12:33 p.m. #

        I like your point about ultra glamorous. I can see how that could happen. I do remember in my last year of college we found these applications in the cafeteria and you could fill out one application and then check off all the different cards you wanted from different companies. I got like 12 of them, but it wasn't until years later that I actually used them. But I wonder how many others ended up in debt right away, just because they didn't understand.

    • Anthony @ Thrifty Dad

      Anthony @ Thrifty Dad 07/25/2013 2:13 p.m. #

      I can still vaguely remember the look on my mom's face when I brought home a credit card application. I can't remember what she said, but I think it was her look that haunted me every time I made a purchase. And I plan to inflict the same amount of guilt in my kids. Hopefully that'll negate the need for one. Ha! Who am I kidding?

      • Sicorra

        Sicorra 07/25/2013 3:22 p.m. #

        That's a funny story! My mother had those looks too. They last forever. Good luck with your kids :-) Just make sure you don't laugh until they leave the room.

    • Corina Ramos

      Corina Ramos 07/25/2013 6:26 p.m. #

      This post came at a great time. Ian asked me about a credit card the other day. We talked about the responsibilities and costs involved with cc's. But the thought never occurred to me to start him off with a prepaid card.

      I think it's a great way to for a young adult to start off. Thanks for sharing this idea with us Sicorra!

      • Sicorra

        Sicorra 07/26/2013 11:05 a.m. #

        Sounds like you had a good talk Corina, especially about the costs involved. It isn't just possible interest but also the cards that charge an annual fee whether you use them or not. We have a card that charges $120 a year. So it is good to know about those charges up front.

    • Corinne

      Corinne 07/25/2013 7:36 p.m. #

      Great tips Sicorra! My oldest is only 5, but I definitely agree with teaching kids how to use money responsibly. I really like the prepaid credit card idea.

      • Sicorra

        Sicorra 07/26/2013 11:08 a.m. #

        It is kind of a cool idea. Who knows what will be available when your kids are in college, right. Everything will probably be done via a cell phone, or something we haven't even thought of yet.

    • zimmy@moneyandpotatoes.com

      zimmy@moneyandpotatoes.com 07/25/2013 11:54 p.m. #

      Yep, I think a prepaid card for college students is a must. It should also accompany a promise by the student that they will not get any credit cards while in college. The credit cards companies have been offering credit cards to college students without jobs for decades and it really shouldn't be allowed.

      • Sicorra

        Sicorra 07/26/2013 11:09 a.m. #

        That would be a good idea. I wonder how many students would actually stick to the rule though.

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