According to the U.S. Department of Labor, at least 79% of college students today carry at least one credit card, and the average balance for college students is more than $2,000. Away from their parents for the very first time and faced with basic living expenses in addition to things like new clothes and video games, many college students find themselves without a concept for budgeting money.
Most parents realize that college students need to start building a healthy credit file from the time they first enter university classes. It makes renting an apartment and buying a car upon graduation much easier. But it’s also important for parents to help their college students learn how to budget money effectively, which is where reloadable debit cards come in handy.
Rather than giving a college student a credit card with a $5,000 credit limit, parents can sign them up for reloadable debit cards, such as the Visa BUXX card. The parents control how much money is on the card—either by setting up monthly allowances or adding new money when the balance runs low—but the college student doesn’t have the freedom to charge extraordinary balances.
Most financial institutions have implemented reloadable debit card programs, and not just for college students, but also for adults who need to rebuild their credit history. A credit check isn’t required to be approved for a reloadable debit card because no credit is actually extended; you can’t charge more than you have available on the card.
The best thing about applying for a reloadable debit card, however, is that students and parents can work together to create flexible and practical budgets. Parents can check their college students’ balance whenever they would like (most conveniently online) and can even see where purchases were made to evaluate their children’s decisions.
According to Forbes, nearly $120 billion will be spent in 2007 with reloadable debit cards, and the majority of this money will be spent by college students and people will very poor credit scores. It is possible that these cards will become federally regulated in the near future because, as FEMA’s experience during Hurricane Katrina illustrates, there is potential for abuse of this program.
If you’re looking for a reloadable debit card for your college student, you can talk with your financial institution to determine what options are available. In addition to banks, credit unions and wire transfer services (such as Western Union) supply these cards, all with varying fees and stipulations. For example, the Visa BUXX reloadable debit card costs $12.00 at Wachovia to set up, while an annual fee of $15 applies when you get the card through National City.
College students might also like the Wired Plastic Prepaid Visa, which is not only a reloadable debit card but also a rewards system. You earn one reward point for each dollar you spend on the card, which can be redeemed for plenty of prizes. It also comes with a Credit Builder program for college students who are interested in building solid credit histories.
Just about all of the reloadable debit cards available can be used for paying bills, POS purchases, ATM withdrawals and payroll direct deposit. Some, such as theWestern Union Prepaid MasterCard, can also be used to deposit your tax return every year at no extra cost. If you are a college student and you want to learn how to budget your money effectively, a reloadable debit card can offer you the flexibility of a credit card without any of the risk.
Parents who are interested in applying for a reloadable debit card for their college student should look into those cards which allow parent monitoring, such as Visa BUXX. This is especially the case if the parent will be funding the account rather than the college student.