Students Have Alternatives To Credit Cards
With millions of college students returning to school in the next month, many may opt to apply for a student credit card. While this can be a good way for responsible people to prepare for emergency expenses, others who fear credit card debt may want to look into alternatives.
Alternative No. 1 – Prepaid cards
Parents who don’t want their children to have a credit card can browse the various prepaid options. This credit alternative allows college students to have funds if they ever run into a surprise expense without having to worry about piling up credit card debt. Additionally, parents have the ability to reload these cards whenever their child is in need.
Alternative No. 2 – Secured credit cards
Another popular option for college students are secured credit cards. These don’t come with the same debt risk as traditional plastic, as users are required to send a security deposit in order to receive a line of credit and the cardholder is only allowed to spend that amount of money. While there isn’t a big risk of debt, students are able to have positive activity from these cards reported on their credit reports, which doesn’t happen with prepaid cards.
Alternative No. 3 – Student checking account
One way to completely avoid credit card debt is to open a student checking account. Parents can transfer whatever money their child needs throughout the year directly into this account, which can be accessed via a debit card. Many banks offer low- or no-fee accounts to students so they don’t have to worry about keeping a minimum balance. If parents want to be able to keep track of their child’s spending, it may be a good idea to set up a joint checking account to ensure they aren’t wasting their money on non-essentials.
Alternative No. 4 – Gift cards
In the past decade, credit card providers such as American Express and Visa have begun to offer gift cards. These can be purchased at numerous places, such as the grocery or convenience store. Before your child heads back to school, it may be a good idea to buy a gift card with a couple hundred dollars loaded onto it so they don’t have to turn to a credit card to help pay for textbooks and school supplies