Student Credit Card or Student Debit Card?

Filed Under Credit Cards, Prepaid Debit Cards

So your bambino is getting ready to trot off to college. It’s a big step and I’m sure you’re having a lot of conflicting feelings about it all. You want them to go but at the same time, you don’t. You want them to be happy too, but for the most part you want them to be safe. And that safety extends to their financial well being not just their physical well being. So to protect them financially, you’re wondering what’s the best choice, a student credit card or a student debit card?

Anyone who’s spent 30 seconds on this website will know what my answer is going to be to that question – a student debit card. Hands down, that’s the best choice for just about anyone, let alone a young person with no financial experience. It would be a mistake to let your child run off to school with a credit card. Here’s why.

Consider for a moment that an 18 year-old has probably never balanced a budget or maybe even a check book. They have also probably never had to pay anything back in any kind of installment fashion or incurred any bank fees. And I don’t care how high their SAT scores are, they’re not prepared to dissect a monthly credit card statement and search out the hidden traps. In short, though they may be able to write a Pulitzer prize-like essay, a brand new college student has very little financial literacy.

It also takes more than just financial literacy to handle student credit cards properly. If you don’t believe me, look around. There are lots of people in credit card trouble today who know plenty about finance. There are lawyers, accountants, and bank executives who don’t handle their plastic correctly. That’s because you need a strong application of discipline too.

Credit card purchases are a little odd to begin with. Buying something on credit and then paying it back later is a little unnatural. Making sure you have the money tomorrow for what you charge today takes some personal control. I’m not confident that any college freshman has that type of patience and restraint.

So that brings us to student prepaid debit cards.

The issues that arise when considering credit cards and teenagers don’t come to bear when the conversation turns to reloadable debit cards and teenagers. Let me illustrate with a simple analogy. A credit card is more like a motorcycle while a prepaid debit card is more like a 10-speed bicycle. They’ll both get you where you want to go but (obviously) one carries with it a lot more risk than the other. In the case of our youngsters we want to limit that risk.

If a college-bound student has no financial experience, fine. Prepaid student debit cards can be great teaching tools for acquiring that experience. For instance, you can easily overspend with a college credit card because the banks make that simple and then you’re potentially caught in a long-term payback cycle that can last for years. On the other hand, that can’t happen with a prepaid debit card. If you try to buy something with a debit card and you don’t already have the cash loaded onto it, your transaction simply fails. No harm, no foul, and no 6-10 years of minimum payments. I don’t know about you, but I think that’s a great financial lesson.

Then there’s the discipline issue. Even the best student credit cards enforce very little. What they do however is penalize you later on for your lack of discipline today. Reloadable cards however require that discipline up front. If you want to spend your money, then you’ve got to earn that money first. That’s another truly excellent lesson in my book.

Of course there are other reasons why a reloadable student debit card is a wise choice for your kid. For one, you can activate the card as a 2nd card on your account which means you can view each and every transaction made on the card. That way you can know for certain what your son or daughter is spending their (i.e. “Your”) money on.

Another great reason is that you can reload the card anytime you want to. Usually with reload packs or with a straight cash-and swipe transaction. You can do it in a way that’s convenient for you and it can be available on the student debit card literally within minutes. That means if there’s ever an urgent need, you can funnel money to your child in no-time, no matter how far away their dorm room is.

In the end, the choice between a student debit card vs. a student credit card isn’t even close. The student debit card wins hands down. I know it’s the right choice for my kids.

   Related Posts:
Start With a Student Debit Card
The Smart Way to Make Credit Card Purchases

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best student credit cards, college credit card, credit card purchases, credit card trouble, Credit Cards, financial experience, Prepaid Debit Cards, student credit cards, Student Debit Card

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