Prepaid credit cards put holder in charge

Posted on October 29, 2007
Filed Under Advice, Prepaid, Students Credit Cards | Leave a Comment

Why to obtaine a “prepaid” Visa or MasterCard?

When your kids begin college next year, you want them to have a major credit card (Visa, MasterCard, etc.). In particular, you want them to have the conveniences of a credit card. They can charge larger amounts than they would carry around in cash and use it at places that don’t accept checks. Also, with a credit card, they can make purchases over the phone and online.

But here is the concern. When kids start college with a Visa card in hand (co-signed by parents), they can charge more than they could afford. They may start making cash advances on the card. Before long, they can charge the maximum they could up to their credit limit. Then, they are making the minimum monthly payments and paying ridiculously high interest rates on the balance due. This can happen easily. Isn’t there some way to get kids a credit card and still avoid the incurring credit card debt?

Prepaid “credit cards” are a good option for a college student.

They have, essentially, the same benefits and is used just like a regular credit card. At the same time, it is impossible for the cardholder to overspend or incur any debt on the prepaid card. The prepaid card is risk-free for the bank and the cardholder. You need not co-sign for the card.

With a prepaid card, money is deposited into the credit card account. The cardholder can spend up to that amount when charging on the card. At any time, additional money can be deposited into the account. As with regular credit cards, the cardholder is protected from fraud and unauthorized use.

To obtain a prepaid credit card, check your bank, other banks or online. At any search engine, type “prepaid credit cards.”

To comparison shop, look for one with no annual fee, application fee, participation (monthly) fee or per-transaction fee.

Typically, this prepaid option is exercised by individuals who are ineligible for an unsecured (i.e., regular) credit card. In your case, it is a preventive measure. And yet again, prevention is easier than correction.

Comments

Leave a Reply