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How to Choose the Best Payment Cards for College Students

Writing a check is so 20th century. Today’s college students typically carry a card to pay expenses while they’re away from home. But is debit, credit or prepaid best for your child?

Don Milne May 23, 2019

Sending your children off to college is great adventure for them. And like most adventures, it pays to pack smart to face the challenges they will meet. They will probably need some form of transportation. They may need to stock a kitchen. They will need to set up a budget to make sure their income covers their expenses.

And, because this is the 21st century, they will need to have some form of plastic for payments. In fact, they may not even know how to write a check — and there is an argument they don’t need to.

The three main choices of payment cards to pick from are debit cards, credit cards, and prepaid debit cards. There is no one “best” option: The card you choose depends entirely on your child and how they plan to use it.

College Payment Card Option #1: Debit Cards

A debit card is tied to the holder’s checking account. A Zions Bank Anytime Checking account can be opened with a minimum balance of $50 and no monthly maintenance fee. If the student opts out of paper statements in favor of convenient eStatements, there is no paper statement fee, either.

With a debit card, your college student can make purchases anywhere Visa is accepted — in person or online. They will need to decide whether to apply for overdraft coverage. It can be nice to know you can make purchases when your checking account balance is super low — to buy a tank of gas to make it home, for example.

On the other hand, if the overdraft allows the student to overspend on non-essentials, they will have an outstanding overdraft to repay.

In short: College students who are careful spenders can benefit from overdraft. Those who are more carefree spenders should probably pass on this option.

The nice thing about debit cards is that the money comes right out the student’s checking account. With online or mobile banking, they can view their checking account balance to find out how much they still have.

College Payment Card Option #2: Credit Cards

Unless your college-bound child can show proof of steady income, they are most likely going to need an adult co-signer on a credit card until age 21.

Yes, a credit card will give your college student the chance to start developing a credit score, but it could be good or bad, depending on how responsibly they use it. The average college credit card users will finish school with more than $3,000 in credit card debt. A lot of that may be for impulse purchases, so it can be wise to consider a card with a low credit limit.

One credit card option that may make for a good first credit card is a secured credit card. This kind of card is secured by a savings balance. The student can’t spend more than the amount in the savings account that the card is tied to.

College Payment Card Option #3: Prepaid Debit Cards

These types of debit cards are not tied directly to a checking account. They are loaded by a transfer from another account. Sometimes there is a fee to load funds onto the card. When there are not enough funds on the card to make a purchase, the transaction will not go through. This may be a good option to keep spending in line.

One version of a prepaid card is a Zions Bank OnCard. OnCard is super convenient because parents can reload it at no cost via online or mobile banking, and you can track spending with its integrated budgeting app.

All children are different and what might work great for one may not work for another. Parents can weigh the pluses and minuses of each card type and select the best match for each child.

 

The suite of Zions Bank Student Banking products includes Anytime Checking, Visa Debit Card and digital banking tools. Visit us online or talk to a banker by stopping into a Zions Bank branch near you.

Don Milne is Financial Literacy manager for Zions Bank.

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