Some adults feel skeptical about providing teenagers with a credit card. True, many youngsters have had to deal with bad credit problems as a result of poor credit card use. Nevertheless, you cannot deny the fact that credit cards are necessary for building credit history. If you are worried that your teenager may fall in the trap of bad credit due to uncontrolled spending, you may consider getting a prepaid debit card instead.
Yes, a prepaid debit card gives young people the chance to establish an early credit history while minimizing the risk of bad debt. Debit cards are perfect tools to teach teenagers about responsible financial management. How can prepaid debit cards minimize the risk of bad debt? What is the difference between a regular credit card and a prepaid card? What are the advantages you can enjoy from a prepaid debit card?
The Difference of Credit Cards and Prepaid Cards
Credit cards differ from prepaid debit cards in the sense that the cardholder is not extended a credit line. A prepaid card holder cannot use the card for payment unless there is an available balance deposit in the account. Therefore, bills charged to a prepaid card are not considered debt at all. There is no need for repayment because all prepaid card charges are automatically paid off using the cardholder’s existing funds.
Continue Reading: Prepaid Debit Cards- Great Credit Tools for Young People
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