Prepaid credit cards can be a great way for parents to ensure that their children have a monthly allowance, without worrying about them losing cash or a check. College is very expensive and a student loan only goes so far. You do not want them racking up credit card debts, but you do want them to learn how to use their money wisely. A prepaid credit card can be the answer to everyone’s questions.

Unsecured credit cards are those issued by a lender that do not require a deposit. The credit limit is based on their ability to repay the debt, as well as what their credit score shows. Prepaid credit cards are cards that can be used anywhere that a debit or credit card is used. They have a set limit based on the money loaded and the student cannot spend over that limit.

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.

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This entry was posted on Monday, December 24th, 2007 at 8:33 pm and is filed under Financial Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.