Education will often fall by the wayside when it comes to the college student, prepaid debit cards and student credit cards. Though these two cards are similar, there are very different financial instruments. This article will help explain the difference between prepaid credit cards and student credit card offers.

The Prepaid Debit Card

A prepaid card for a student is much different from a credit card. To obtain the student pre-paid card, no bank account or good credit score is necessary.

Money is ‘loaded’ onto the prepaid card and as the balance decreases, more money can be added. With this card, the student will also have the ability to deposit and withdrawal money from ATMs. However, these cards usually have high fees.

Many believe that the prepaid cards are a fantastic tool to teach students how to handle their money responsibly.

Some prepaid cards offer identity theft protection and free credit reports for a year.

Most of these cards must be purchased. Once the card has been purchased, there is usually a nominal monthly fee. Some prepaid cards will waive the ATM withdrawal fees as long as a minimum deposit, set by the company, is made monthly.

Some companies only allow one customer service call per month without charge and then charge a fee for each call thereafter.

The prepaid cards will not assist in building the student’s credit. This is because the transactions made on this card are not reported to the credit bureaus.

Student Credit Cards

There are reward or cash back earnings available on some of the credit cards for college students. This amount varies from 1% to 5% and sometimes depends on the type of purchases that are made. Some of the student credit cards will actually reward the student with points for paying on time and maintaining a good grade point average.

A student credit card allows them to begin building a good credit history, which is essential when they decide to purchase a home or car.

The majority of these student cards have a 0% introductory rate for the first six months. Some cards only apply the 0% rate for purchases, whereas others also apply it to cash advances and balance transfers.

Once points have been accumulated, they can be redeemed for various rewards offered by the company. Some of these rewards include concert tickets, cash back, plane tickets and gift cards, just to name a few.

Student credit gives the cardholder great advantages if the balance is paid in full monthly.

Each of these cards has pros and cons. What must be considered is the reason the card is being obtained. If interested in building one’s credit history, a student credit card would be the choice to make. For the younger student, a prepaid card may be a good choice to teach responsibility with money. Once the younger student begins college, obtaining the student credit card to build a credit history would definitely be something to consider. Since he has already learned to be responsible with his use of the prepaid card, he should be able to build himself a good credit history in no time.

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