Love To Have A Prepaid Credit Cards?

Parents have to face the arduous task of seeing their beloved children leaving to make their own way in adulthood. You have raised your children and prepared them as well as you knew how and now it is time to let them experience the joys and sorrows of college.

Even though they are old enough to build their own credit card credit rating, they still may need some extra help. A student loan only goes so far and you do not want to worry about them racking up a huge student credit card debt.

The solution is prepaid credit cards.

Difference Between Unsecured Credit Cards and Prepaid Credit Cards

Unsecured credit cards are those issued by a lender that do not require a deposit. The credit limit is based on their ability to repay the debt, as well as what their credit score shows.

Prepaid credit cards are cards that can be used anywhere that a debit or credit card is used. They have a set limit based on the money loaded and the student cannot spend over that limit.

So Why Use A Prepaid Card?

Why shoud your children should use a prepaid credit card instead of bank credit cards?

The first reason is that a bank credit card can exceed the balance in the checking account if it is linked to the account. This can cause over limit fees to rapidly accumulate.

A bank credit card, if it is not tied to the checking account, is reliant upon credit scores. If your child has not established a credit rating, then he or she can be turned down.

Each time a lender runs a credit card application, the credit score can be harmed and lowered. This perpetuates the cycle of applying and then the subsequent denial, based on the credit scores.

The benefits to using prepaid credit cards are many. You do not have to worry about monthly payments. You decide how much they can spend in a month and it teaches the student the benefits to using and spending money wisely.

It may not help them build their credit score, but it can certainly protect them from going into debt. You are helping your child learn fiscal responsibility without worrying about receiving calls from bill collectors.