Advantages And Disadvantages Of Students Using Prepaid Credit Cards

The thought of giving students prepaid credit cards, as opposed to traditional credit cards, is in our view, a wise idea. However, there are many advantages and disadvantages for students using prepaid credit cards so let’s take a look at those.

A decided advantage of a student using a prepaid credit card as opposed to a traditional credit card is the fact that their spending can be controlled. With a prepaid credit card, the cardholder cannot spend any more than what has been deposited into their account.

In that respect it is an excellent tool to teach restraint and discipline to young consumers. While learning fiscal responsibility, prepaid credit cards also offer the consumers many of the same protections as the traditional credit cards do. These protections include buyer protection programs and coverage against theft and unauthorized use.

The downside of prepaid credit cards include the various fees charged by the issuer’s. The fee is very depending on the credit card company but they can include fees for such things as opening the account, making transactions and putting more money into the account.

Is also important to keep in mind that the activity on prepaid credit cards is not reported to credit agencies. The reason it is not reported to credit agencies is because you’re not actually being extended credit, but rather access to your own funds.

In that sense if you’re trying to build credit then prepaid credit cards are not for you. On the other hand, if you’re not worried about establishing credit, or are having a hard time getting a traditional credit card, then prepaid credit cards are something that you should definitely look into.

Related Information:

  1. What You Must Know About Prepaid And Secured Credit Cards With more and more banks and credit card issuers restricting the flow of credit, consumers are finding it increasingly difficult to get approved for credit cards. This coupled along with…
  2. Prepaid And Secured Credit Cards See Growth Many financial experts predict that prepaid and secured credit cards will become increasingly popular with consumers as the recession drags on. With traditional credit cards being harder and harder to…
  3. Student Credit Cards – A Look at the Advantages and Disadvantages of Having One There most certainly is a lot of talk about the perils of credit cards lately and most of it has been spurned on by the poor economy. While much of…
  4. A Summarization of the Advantages and Disadvantages of Using Credit Cards Sometimes it’s important to look at the things that we may take for granted but are nevertheless very important. Credit cards are a financial instrument that play a major role…