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The Gift of Prepaid Credit Cards
By plrprousers | May 31, 2009
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.
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 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.
Prepaid credit cards are great gifts to give your child. He or she can learn how to manage their money wisely and you can control how much money they have to spend each month. There won’t be interest rates tacked onto the purchases and once the money is gone, you can upload more money without worrying about increasing the spending limit beyond what they are responsible enough to handle.
Tags:bank credit cards,credit card credit,prepaid credit cards,student credit card debt,student loan,unsecured credit cards,visa credit cardsRelated posts
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