Using Prepaid Credit Cards As An Alternative For Your Student Loan
College can be a tough time for parents. First, you see your children leaving the protection of home where you cannot monitor their lives. It is a struggle giving up that power and not knowing if your children are in danger. Second, the college years is an expensive time when money always seems tight.
You do not want them getting into student credit card debt, but you want them to have something in case of an emergency. Unsecured credit cards are everywhere but may not be the right answer to helping them learn financial responsibility. Why not try prepaid credit cards as a solution?
Prepaid credit cards are very similar to unsecured credit cards and can be used anywhere bank credit cards, MasterCard or Visa credit cards, or debit cards can be used. The difference is that the prepaid card acts more like a debit card. You deposit money into the account and your child can only use that amount.
There is no need to worry about them going over the limit and you can track how much money they are spending on a monthly basis. An additional bonus is in knowing that your child is learning how to manage their money.
So why use a prepaid credit card instead of bank credit cards? The first reason is that a bank one 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 one, 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 an 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.
Prepaid credit cards can also be given as gifts. If you do not know what to get your student for his or her birthday or graduation, a prepaid card can be perfect. Unlike a gift card from a particular store, a prepaid credit card can be used anywhere that accepts credit or debit cards.
It is a responsible way to learn how to use credit, without the worries of a monthly bill. For students in college, this can be the start of a great future with a good credit score. Think of it as helping your child to learn responsible spending, without the worry of huge interest rates.
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Help answer the question about prepaid credit card
Can I use a prepaid credit card to rent a car from Enterprise?I have a prepaid Visa credit card from netspend that I wanted to use. I also have a Bank of America Checking ATM debit card with the visa logo as well. How much do I need to have on them for it to authorize correctly?
June 12th, 2009 at 12:21 pm
A debit card should work–I've been using my MasterCard branded debit card online for years. However, there are occasionally sites that say they don't take debit cards.
In that case, you could try getting a secured credit card. You make a deposit to the bank which becomes the limit of the card (you can't touch that money, so make sure you can afford it). So if you put $500 on a secured card, you would have a credit card with a $500 limit. After a year or less, the secured card will become unsecured and you get your deposit back and it becomes a regular credit card. It reports as a regular card to the credit bureaus too, so no one would know it's a secured card but you. Bank of America has one that is supposed to be very good.
You could also try shopping through sites that use Paypal–you can have Paypal draw directly from your checking account.
June 12th, 2009 at 1:13 pm
Yes there is a way for you get a prepaid credit card with your name on it. Its take 7-10 days and its is a credit card.
It cost like 10.00 please see walmart dealer or https://www.walmartmoneycard.com/walmart/homepage.aspx
I hope it works.
If you have a bank card visa that will work also.
June 12th, 2009 at 5:06 pm
If you want a reloadable prepay card you will need to get a Green Dot Card.
Most of the others are prepaid Visa cards with a set limit and they can't be reloaded. You buy a $100 Visa Gift Card and use it up but can't reload it because it is not a real account. (Does not have your name on it).
June 12th, 2009 at 5:53 pm
As long as it is a valid Visa or Master card etc. yes
June 12th, 2009 at 12:03 pm
Great info. thanks!
June 14th, 2009 at 3:34 am
sometimes those prepaid debt cards cost
you anywhere from 5 to 20.00 and thats just to get
the card, then there might be charges for non-use or even if you
use a monthly charge.. and do you want to use a ATM more fees
.
read the fine print
I would sugggest you can open a checking account usually for
a low balance or even free of monthty charges and most
of those checking accounts include debit card which works
just like a credit card..
June 15th, 2009 at 12:02 am
yes, in some ways it's better.
You have already paid the money ahead of time and now you can use it, up to the limit of your payment minus the fees charged for managing your acct. With a prepaid credit card you cannot go over the limit. so you realistically have no debt with the company because it is prepaid.
June 15th, 2009 at 5:35 pm
I don't think so..
June 15th, 2009 at 7:33 pm
sign up for a paypal account and use the card on that, paypal doesnt care if its prepaid, and choose paypal at ebay checkout
June 15th, 2009 at 10:09 pm
Prepaid cards won't, but secured cards very often report to the credit bureaus, and they WILL improve your credit.