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Prepaid the better way, experts say

Prepaid credit cards can be a good way to ease young adults into financial independence, but users — and their parents — ought to be aware of the costs and limitations that come with them, experts say.

Prepaid credit cards can be a good way to ease young adults into financial independence, but users — and their parents — ought to be aware of the costs and limitations that come with them, experts say.

Many major banks offer prepaid cards, onto which a set amount can be load­ed in advance.

Most pur­chases can be made in the same way as an ordinary credit card and can also be used to draw funds from automatic banking mach­ines. The difference is that once the amount is gone — it’s gone. That is, until it is topped up again.

A lot of prepaid cards are explicitly targeted toward youth. For instance, MuchMusic offers a pre­paid Mastercard, and has a page of parents’ frequently asked quest­ions on its website.

 
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