WASHINGTON--(BUSINESS WIRE)--This year’s crop of high school graduates is on the verge of some pretty big lifestyle changes. For many, those summer jobs and internships will quickly give way to saying goodbye to family and friends and heading off to college, which means independence of all sorts. Many will be managing personal finances, like paying for essentials like books, groceries and coffee, and—importantly—staying on budget and out of debt, for the time by themselves.
To nurture students along the path to financial independence and responsibility, smart parents are choosing prepaid cards as the best way to give recent grads the convenience and security of a reliable card—with the trusted logo of American Express, Discover, Mastercard or Visa—that can be used to pay for purchases and get cash almost anywhere with the added benefit of built-in controls to avoid the stress and consequences of overspending.
“Parents and young adults are recognizing that prepaid cards offer exactly the right combination of financial freedom and control,” said Brian Tate, vice president of government relations at the Network Branded Prepaid Card Association (NBPCA). “Students have their own cards in their own names and can use those cards to fit their new, independent lifestyles. Plus, parents have peace of mind knowing their students always have access to their money, but won’t be able to spend more than they can afford.”
Both parents and students appreciate the flexibility of prepaid cards, which can be used anywhere debit cards are accepted—including online—so students won’t miss the best deals on textbooks or late-night study snacks at the library. When the amount of money available on a student’s card runs low, the student or parent can easily add more funds—online or at many retail stores—with immediate access to that money.
The budgeting aspect of prepaid cards is also attractive to students with limited funds and to parents who want to control their students’ spending. Unlike credit cards with high spending limits, prepaid cards typically cannot be used to spend more than the amount of money the student or parent loads to the card. This important feature helps students learn to manage money without the risk of overspending and, potentially, accruing debt with interest payments. In addition, prepaid cards may include other important protections, such as zero liability protections offered by the card brand and FDIC insurance.
Because no two college experiences or college students are alike, a wide range of prepaid card options—available at a variety of price points—makes it easy for parents and students to find accounts that fit their specific financial needs and lifestyles. For example, for students studying abroad, there are options that limit foreign transaction fees. There are also prepaid cards with options like bill pay or ATM access that can make the difference for busy college students on the go. Some prepaid cards even have the option to offset most fees with ongoing direct deposit.
“While graduates and their parents have a lot of choices to make over the next couple of months, the overall benefits of prepaid cards make them an obvious choice as students take charge of their personal finances,” added Tate. “The hurdles of adult life and personal finances can be daunting, but prepaid cards offer a flexible, safe, affordable way for students to gain their financial footing as they transition to the next stage of adulthood.”