Posts Tagged prepaid cards

Teaching Kids Credit Card Management

May 21st, 2009

teencardHow do you teach your teens credit card management?  According to most experts, the best way is to get them on it early via prepaid credit cards.

Prepaid credit cards work much like regular credit cards, allowing you to shop without cash, most anywhere you go.  Unlike regular credit cards, though, you can set the spending limit depending on how much funds you decide to put into it.  Whether it’s $100, $200 or $500, the prepaid credit card holder gets to charge only that and no more.

Many issuers allow credit card holders to apply for prepaid credit card extensions to their main account.  That means a parent can easily ask for prepaid credit cards issued to their children, which they can then use to give their kids allowance.  Some prepaid credit cards, such as those from Discover, are also enrolled in the rewards program (among other benefits), which means the children are able to make full use of features regular credit cards come with.

How exactly will this help teach kids credit card management, though?

1. Kids are exposed to responsible use of the card, forced to keep spending to within their “credit limits”.

2. With monthly statements, parents can get together with their kids to review their spending and talk about potential problems.

3. It helps educate them about what a credit card is about – a tool of convenience, not an avenue for unlimited spending.

4. It helps give them an idea of how to maximize rewards programs and other credit card benefits

Facecard Prepaid Mastercard Review

April 17th, 2009

facecardContrary to what you may think at first glance, the Facecard Prepaid Mastercard has nothing to do with Facebook.  Clever naming, though, since it’s essentially geared towards that market of young people who probably spend hours upon hours of their days buried on social networking and IM sites.

Since this is a prepaid card, you have to keep your eyes wide open for the fees.  We’ll start with the things you can do for free, though: there’s no charge to activate the card, no monthly membership charges, no fees when loading via ACH and no charges for Facecard to Facecard fund sharing.

For the actions you’ll get charged doing, here’s the complete list: ATM withdrawals ($1.50), international purchases ($0.50), going zero balance ($9.95),  negative balance ($9.95, per incident), mailed statements ($1.95), chargeback ($25) and inactive account ($4.50).  If that sounds like a list telling you to essentially give your money away, you’re not alone – that’s how it strikes me too.

Fees notwithstanding, you’ll get the same charges out of pretty much any prepaid card in the market so there’s really nothing making this worse than any of the other offerings.  Since, there’s no fees for ACH transfers, it’s actually pretty decent.  Do note that the Facecard lacks an over-the-counter deposit feature.  If you don’t have a bank account, you can’t load it with cash.

Like other prepaid cards, the Facecard Prepaid Mastercard is designed for convenience, not value.  It also won’t help your credit-building efforts, like a secured credit card would.  If you need one, this might be a good choice.  Otherwise, just move along – nothing to see here.

Prepaid Credit Cards Might Be A Good Alternative To Banks

April 7th, 2009

prepaidcardIf you avoid dealing with banks for some reason and prefer to spend in cash, a prepaid card can make your life just a tad more convenient.  With a reloadable prepaid card, you can easily use cash to make purchases that would normally require a credit card, including shopping online and booking a hotel room in advance.

Great For Students

Prepaid cards are great financial instruments for students, evidenced by the overwhelming number of high school kids using them.  With one in tow, parents can easily reload their children’s accounts in cases of emergency, without having to disrupt the rest of their day while doing it.

Money Management

Apart from the purchasing convenience it allows, prepaid cards are a great way to manage your money compared to cash.  Most prepaid cards offer online account statements, which allow you to track your spending without having to keep your own record.  They also allow you automate bills the same way you can with a credit card – a great alternative to having to mail out your payments every month.

Fees

The biggest deterrent to prepaid card are the fees.  While credit cards allow the issuers to make money from the interest on the debt, prepaid credit cards  earn their keep from charges.  Make sure to find out what transactions you will be charged for when you use a prepaid card solution so you can plan their use accordingly.   Among the likely fees most prepaid cards charge include reloading fees, maintenance fees and withdrawal fees.  Good news is, some cards charge less fees than others so shop around before signing up for one.

noel Posted in Credit Card Guides

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