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Call it prepaid credit cards with a new, friendlier face. A new breed of prepaid credit cards are targeting the millennia generation, aiming to bring their kinder, more customer friendly version of prepaid plastic to 14-25 year-olds and, most notably, their parents.
Prepaid credit cards have traditionally been considered to be mainly for people with bad credit. Because funds are preloaded (prepaid) onto the card by card holders, no credit check is necessary and approval is automatic, regardless of credit history. Like most bad credit credit cards, however, prepaid credit cards have come at a cost, charging a multitude of confusing, steep fees for all sorts of services from account opening fees to monthly fees, fund loading fees, ATM fees, overdraft fees, paper statement fees, and more.
The new breed of prepaid credit cards, however, aims to introduce prepaid credit cards to a new market: college students and parents of teens and tweens. Cards like Facecard Pre-paid MasterCard and Wired Plastic Prepaid Visa Card aim to make inroads with the fast-growing, multi-billion dollar market of plastic wielding 14 to 25 year-olds. The cards provide an alternative to traditional credit cards by offering a version of plastic with all the benefits of credit cards and none of the drawbacks.
The new prepaid credit cards afford the same ease of use as credit cards, and they provide greater safety and security than cash. Parents can order a prepaid credit card for their child and load money into the account directly from their bank account, depositing a monthly allowance and/or paying for chores directly onto the prepaid card instead of having to hassle with cash.
Like credit cards, prepaid credit cards can be used for purchases everywhere, including online. Prepaid credit cards offer a safe way for tweens and teens to shop online, while at the same time keeping them at a safe distance from mom and dad’s credit cards.
Unlike traditional prepaid credit cards for people with bad credit, the new prepaid credit cards come at much lower cost. Facecard, for example, has waived the typical prepaid card fees like activation fees and monthly membership fees; the card also offers free fund loading, as long as it’s from a bank account. The card doesn’t charge hefty overdraft fees either, if there are not sufficient funds in the account, the purchase will simply be declined.
Facecard and Wired Plastic are marketed as a way for parents to teach children financial responsibility while also protecting them from the pitfalls of credit cards. Kids can log into their account and check their balance and view transactions online, and they can’t charge more money than is preloaded into the account and get into debt.
The cards come with some hip, kid-oriented features, such as the ability to send a text message from a cell phone to the card issuer to get the balance remaining on the card or sign up for automatic email alerts when the balance gets low. Parents also have access to the online account, enabling them to monitor the card balance and keep an eye on their child’s spending habits.
The new prepaid credit cards are also marketed as an alternative to credit cards for college students. With concerns growing about college students graduating with high credit card debt, the new prepaid credit cards offer a low-cost alternative, and an easy way for students to manage their money.
Facecard goes one step further, taking steps to increase the financial literacy of college students by educating them about their finances. In August 2008, Edo Marketing, the marketing group behind Facecard, sent representatives nationwide to college campuses as part of a campaign to teach college students basic financial skills like budgeting and how to keep track of spending and credit card use.
