How to Find the Best Prepaid Card for a College Student

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Facecard_College_Student_PrepaidPrepaid cards are gaining popularity among college students (and their parents) for several reasons. First, with a prepaid card, you don’t have the risk of going deep into debt, high interest payments, or late fees. Second, if parents are involved in the finances, they can easily add money to the card online. And finally, under the new credit card law that goes into effect this month, students do not need parental consent to get a prepaid card like they will for a traditional credit card.

A prepaid card, sometimes called a prepaid credit card or a prepaid debit card, acts like a debit card but without the bank account. Prepaid cards are part of either the VISA or MasterCard debit network and accepted just about anywhere. They can also be used at ATMs, internationally, or to shop online.

But picking a prepaid card can seem overwhelming. There are literally dozens of cards to chose from, and the fees that these cards charge and the options they offer can be difficult to compare. To help you sort through those options, we’ve put together a checklist of things to consider and a few suggested cards that seem well-suited for college students.

How will the card be used?

All prepaid cards charge fees. Unlike many no fee credit cards, the prepaid market charges fees because they do not earn as much from merchants when the card is used. The key is to find the lowest cost card, which depends entirely on how you plan to use the card.

For example, if you plan to make a lot of ATM withdrawals, you’ll want to find a card that offers free or low cost ATM usage. That same card may charge a lot to use the card directly with retailers, but if that’s not how you plan to use the debit card, those fees won’t matter much. Conversely, you may plan to keep the money on the card and use it much like you would a credit card, without getting cash from teller machines. If that’s the case, how much a card charges for ATM usage is of little significant to you.

We maintain a list of prepaid cards with no fees or low fees, which you can check out. But here are some suggestions:

Heavy ATM Use: Green Dot offers free ATM usage at over 15,000 ATMs and is currently offering a $10 bonus with your first direct deposit.

Heavy Retail Transactions: Mango Money Card offers free unlimited purchase transactions and no monthly fee when you load at least $500 on the card each month.

How will you load money on the card?

How you load a prepaid card is also an important consideration for college students. In some cases, parents will add money to the card each month. In other cases, students may have jobs and want to load the card with direct deposit. Here there are two key considerations: (1) can you load money onto the card the way you want to, and (2) is there an associated fee.

In almost all cases, cards offer free direct deposit of funds. So if you have a job, it’s easy to have your paycheck added to your card automatically. If parents will be adding money to the card, you want to make sure the debit card offers free bank transfers onto the card. Each of the cards listed above offers free bank transfers. In addition, some cards allow you to load money from a Paypal account or a credit card, but typically there are fees associated with these types of transactions.

Extra Benefits

Having found a low cost prepaid option, it’s worth looking at any additional perks that the cards offer. For the most part, these extras won’t be the primary driver behind your choice, but they are worth considering. For example, the Facecard Prepaid MasterCard noted above offers what they call “Prewards.” Prewards are like digital coupons that merchants add to Facecard debit cards. Use the card at the merchant and you’ll get a discount off of your purchase. Again, not the primary driver of a decision, but worth considering.

Published or Updated: February 16, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Ken says:

    Great post. This is a great option for parents of college kids. I like that you can deposit to some without fees. A very relelvant topic for today. Good job.

  2. john says:

    is a great option for parents of college kids. I like that you can deposit to some without fees. A very relelvant topic for today

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    john

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  3. Lillie says:

    Thanks for the timely information and resources on the Pre-Paid Credit Cards. I am a financial literacy educator and in addition to updating the college students on the new Credit Card Act of 2009, I was looking for new information that would provide another realistic option. This is ideal and well worth sharing.

  4. Murry Katz says:

    We got our daughter a prepaid cellphone too. Straight Talk, on the Verizon network. Bought it at Walmart and it’s an amazing deal. The Samsung Finesse is a very cool smartphone and paying only $45 a month for unlimited everything is the best deal going! This way, there are no bills and we can manage costs and stay in touch.

  5. Donna says:

    Netspend PrePaid Credit Cards has a fee per use and they do charge at the ATM but if you have a HEB around you it is free to load money onto it. After paying to put money on a card to spend the money it was a refreshing service.

  6. Victoria says:

    So i’m trying to find a pre-paid card for myself and not really sure how everything works, was wondering if some one could tell me which one is good for me.
    my brother lives in California and wants to send me money and this looks like a safer & secure way to do, can some one tell me which card i could do all this with .

    • Rob Berger says:

      Victoria, your brother should be able to add funds to any reloadable prepaid card. They all accept funds via bank transfer. The Walmart, Green Dot, and UPside are three of the least expensive.

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