A prepaid credit card is the credit card for teens or students. Unlike a normal credit card, no credit check is required and there is no chance of your teen running up a large credit card bill.
Perhaps your teen mainly shops online or would prefer not to carry cash but due to a lack of any credit history they can not apply for a regular credit card. (And, let’s face it you probably wouldn’t want them to have one anyway). But, remember, it can be a great way to teach them basic budgeting.
Teens and students often need credit cards for a variety of reasons. They make it easier to purchase a variety of goods and services and are great to have on hand in case of an emergency. But maybe they’re not quite ready for a regular credit card. A prepaid credit card is just what they need.
Advantages of a Prepaid Credit Card
Prepaid credit cards operate more like a checking account with no overdraft facility. Money is prepaid onto the account and cannot be overspent.
The best part of the prepaid credit card is that your teen can charge to their heart’s content and they won’t be in any debt. The money is theirs and once it’s gone, they can’t spend any more until they make another deposit. And you can make deposits on their behalf. There are no bills and no interest charges. It’s the same principle as using a debit card linked to a savings or checking account.
Disadvantages of a Prepaid Credit Card
Well, they’ll have to pay a small fee to set up the account. In addition, they’ll have to pay additional fees every time they deposit more cash into their repaid credit card account. Also note, certain types of service , like a monthly internet subscription may not accept a prepaid credit card.
If you’re looking for a credit card for your teen, consider a prepaid credit card. They have most of the advantages of a normal credit card but you won’t have to worry about your teen getting into debt. And it’s a great way to teach your teens how to budget!
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