(BPT) – This fall, college students around the country will take their first steps toward financial independence. For many young adults, the college years are the first time they are responsible for managing and budgeting their money. With a combination of funds from jobs, their families and student loans, students need to find a safe and easy way to spend, budget and save.
One simple financial tool popular with college students is the prepaid card. These enable the user to easily receive funds (whether through wages or deposits), budget, pay bills, make purchases and even withdraw cash. As the name implies, the funds accessible through prepaid cards are prepaid, so they help avoid debt and overspending.
The “student card,” offered by a financial institution through a relationship with a college or university, is a specific type of prepaid card that allows students to receive financial aid and student loans on the cards. Just like with any other prepaid product, laws and federal regulations (ex: FDIC Insurance, Disclosures, and Regulation E) govern student cards to ensure students and their funds are protected. Still, users should always read the full terms and conditions, paying particular attention to fees, before committing to any card or other financial account.
In addition, prepaid cards may have lower fees than similar financial products, like checking accounts with minimum balance requirements. Seventy percent of consumers are satisfied with their prepaid cards, according to a recent study by GfK Research. Young adults cite ease of use as the top benefit. Student cards also fit an on-the-go lifestyle, with apps to budget, mobile payment options and text and balance alerts, so students don’t have to hold on to receipts.
Prepaid cards are a safer option than carrying cash, and the zero liability policies of the payments networks apply if the cards are lost or stolen. But, when cash is necessary, student cards provide several ways for students to access cash without incurring fees, including through in-network ATMs, surcharge-free ATMs and free cash back with purchases.
The Network Branded Prepaid Card Association (NBPCA) offers tips to help ensure a positive experience for college students considering student cards:
* Many cards offer free online balance inquiry, budgeting tools, text alerts and more. Take advantage of these tools as an easy way to learn to budget and spend money wisely.
* Take advantage of the fraud and loss benefits. Unlike cash, the value on a prepaid card can be replaced if the card is lost or stolen, according to the zero liability policies of the payments network.
* Make sure the card you select offers convenient access to fee-free ATMs. Student card programs should have ATMs located on or very near a school’s campus.
* Before opening a student card account, read the terms and conditions that outline the fees and other costs associated with the account. There should be no cost to open the account or initially receive a student card, but there may be other fees associated with its use.