During our last six week course with seniors at Eastside College Prep., it struck me that many students’ first experience with the financial services world was not a bank account but rather a prepaid debit card. This article from AdAge brought this trend to the surface again:
One-third of millennials either currently use or have used a reloadable prepaid card in the past two to three years compared with one-quarter of the general population, according to the study. And 60% of millennials would consider using one…Prepaid cards, which are also used by parents to teach their children financial responsibility, allow issuers to connect with teens early on, whether they stick with prepaid, like their millennial siblings, or move on to credit or debit card products. “We are seeing it as not only an entry to staying with prepaid, but also as a door that opens to traditional banking products,” said Mr. Chang.
The assignment for students: decide whether a checking account or a prepaid debit card are a better fit given their financial behaviors.
- Ask students to list the services that they are looking for in a checking account and/or a prepaid card. Such a list might include deposit checks, access money from ATM, and point-of-sale at retail stores, etc.
- Find article that draws distinctions between checking and prepaid cards so students understand the difference and the pros/cons of each. Here are a few sources with links to an article: Bankrate, HuffPost, RealSimple
- Now that they understand the differences between a checking account and a prepaid card (and the lines are blurring), they can go to a comparison site, such as this one at NerdWallet, which allows them to make comparisons between both products in the same search.
- List the factors that will matter to them in their selection process (Hint: Fees matter). Have them list the types of fees that they should expect for each product and how they might avoid them.
- Select a specific checking or a prepaid card and identify the reasons why they made their choice.
Since parents often purchase these prepaid cards for their children, this activity provides an opportunity for a dialogue or conversation between parent and child to discuss the merits of prepaid and checking account or how to find the lowest cost prepaid card. Let me know how it goes…