College is an important time to learn about managing finances, if you haven’t already started. How you handle your money will be greatly affected by what method you use to access your money.


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The traditional method is to open a checking account at a bank, which will come with a debit card that can be used to swipe for purchases and withdraw cash from ATMs. An alternative worth exploring is the lesser known but burgeoning market of prepaid debit cards.

What are prepaid cards?

A prepaid debit card is similar to a regular debit card in that you can pay for purchases and withdraw from ATMs, but the difference is that it’s not connected to a bank account. In that way, it can be thought of as a reloadable gift card, though there are different fees and perks included.

Prepaid debit cards are accepted at the same places as traditional debit cards and can be used until the balance runs out. You can put more money onto the card at any time; different companies have different methods of reloading prepaid debit cards. Banks will naturally allow you to use their ATMs, while other companies partner with convenience stores so you can refill at your corner store. Many also can be linked with direct deposit.

Fees involved with prepaid cards

Though they’re useful for learning to budget, prepaid debit cards come with strings attached. They commonly have an activation fee, monthly fee and/or ATM withdrawal fee. These small costs can add up, but like other debit and credit cards, there are benefits that could make the prepaid debit card worth using. For example, they are easy to acquire and don’t require a credit check.

In addition, some prepaid debit cards offer free credit scores, unlimited purchase transactions, online bill payment/check writing and direct deposit. Many also eschew overdraft fees and provide card-to-card transfers, as well as online budgeting. The market for prepaid debit cards is growing rapidly, and companies are taking these cards seriously, loading them with incentives for customers.

Building credit

Like a traditional debit card, a prepaid debit card will not help build your credit score. You spend whatever money you already put on the card, and there is no credit involved in the process. Choosing “credit” as a means of payment when using your debit card just means it goes through that merchant’s payment network (e.g., Visa).

A prepaid debit card can be a safer and easier alternative to traditional banking for college students. Parents can exert more control over the student’s spending, but the lack of independence can be a detriment as well.

Both prepaid and traditional debit cards come with fees, so it’s important to do adequate research on each option. We recommend prepaid debit cards for college students who might not have a checking account, as an option.


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