For years credit card companies and banks were allowed to market their credit cards to students on college campuses. The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) changed the rules. The regulations were implemented to help prevent these companies from contributing to student credit card debt.
Today, a college student won't find banks enticing them to use their high-interest credit cards to rack up thousands of dollars of debt. Instead, colleges are working with prepaid card providers to offer student prepaid debit cards that drastically reduce the possibility of incurring a large amount of debt. Student prepaid cards can also double as school ID cards with two strips on the back to make them even more versatile.
The Basics of Prepaid Debit Cards for Students
A student prepaid card isn't tied to a bank account or line of credit, and can be used anywhere Visa and MasterCard are accepted. Students can only access the money placed on the card, and they aren't charged interest for their purchases.
Prepaid debit cards continue to rise in popularity. In fact, 2011 saw an 11 percent increase in consumer usage over the previous year. This is largely due to the fact that more and more consumers are growing tired of the rising fees of traditional checking accounts, and are also avoiding the pitfalls of credit card debt. With some fees hitting a high of 21 percent at financial institutions where it can be difficult for consumers to obtain an account in the first place, prepaid debit cards-including student prepaid debit cards-are an ideal solution.
Why Prepaid Debit Cards for Students?
Student prepaid debit cards offer students and higher education institutions many benefits. They may double as ID cards students use to gain access to campus buildings, in addition to being used to pay for purchases on and off campus. They provide financial and facility security, and financial aid disbursements can be easily received.
Advantages of Student Prepaid Debit Cards
Prepaid cards offer colleges, students, and parents many benefits:
• The amount of money on a prepaid card is determined by how much has been already deposited on the card-not available credit. While there are background checks, students are not turned down if they have some credit issues.
• Students don't risk damaging their credit score, which can make it more difficult to obtain loans and credit in the future.
• Student prepaid debit cards can be used everywhere MasterCard and Visa are accepted, including both online and in-store purchases.
• Students can learn essential money management skills. Since a prepaid card doesn't allow a student to spend more than what is deposited, there is virtually no risk of overspending. Parents have an easy way to promote their students' financial responsibility.
• Students can pay bills with their prepaid cards and withdraw cash from ATMs on and off campus.
• Parents can add allowances to the student prepaid debit card for safer spending compared to cash. Student loan payments can also be automatically distributed directly from the card for tuition, fees, books, and other student items.
• Prepaid cards reduce the risks of identity theft since their cards are not linked to lines of credit or bank accounts.
Student prepaid debit cards help reduce debt, save time and money, and improve security on campus. Learn more about the advantages of using a CampusCard by visiting the prepaid debit card experts at CardFlex.