Oct 162013

Paypal Student Account LogoSo, your child has reached the teenage years, and you are looking for a way to allow them to spend money more freely, right? This might sound like a bizarre idea, but it has slowly become a valid one in today’s online shopping world. I never would have thought I would see the day when a 13-year-old has a debit card, but that day is here. Paypal has also jumped into this new and expanding market by offering the Paypal Student Account. This account is fairly basic to set up and manage, but there are still some things to think about before opening one for your teenager.

Setting Up a Paypal Student Account

The Paypal Student Account is simply a bank account of sorts that is specifically for students 13 years and older. Paypal makes it pretty easy to start one of these spending accounts for your kids. Once you have logged into your Paypal account, simply click the “Products & Services” tab near the top of the page. Next, click the “View All Paypal Products” link located directly under the Product Finder box. A list will pop down, and then select “Student Account”. These steps are pretty easy, but Paypal will usually inundate your account with ads for the student account, so you might not even have to go searching for it.

Now, here is where most parents will get wary. Paypal, in order to set up the account, will ask for your teen’s e-mail address, name and birth date. This is not wildly inappropriate, but I cannot help but wonder why they need a way to contact the teen. Anyways, after setting up security options and accounts from which to transfer money, it seems that your teen’s account will be ready to go. Paypal will even send an official Paypal Student Account debit card for your teen to use.

Paypal Student Account Fees

Just like every other credit or debit card, there are fees associated with this student account. Buying something with the debit card is free. So is transferring money to family and friends and receiving money from the parent or from others that use Paypal. However, that is the extent of the free services.

Fees for the Paypal Student Account include a $1 ATM withdrawal fee ($3 if it requires a signature), and also a 1% withdrawal fee for ATMs not in the US. Paypal also charges fees if the teen in hoping to sell online. For every payment made to the teen, there is a 2.9% + $0.30 fee (3.9% + $0.30 if from outside the US). There is also a currency exchange rate fee of 2.5%.

Lastly, I think Paypal looks to make money off of family and friends of the teen. Though it is free to receive money from family and friends that use Paypal, there is a fee for those that do not. Those that do not use Paypal will incur a fee of 2.9% + $0.30 USD (3.9% + $0.30 USD if outside the US). The decision of whom pays the fee is made by the money sender. Now, just imagine, for a moment, the amount of fees that would add up if parents asked people to put money into their teen’s Paypal Student Account for the teen’s birthday or graduation. That would really multiple quickly, and I seriously doubt many people would take the time to set up a Paypal account to transfer the money.

Pros of the Paypal Student Account

From a student’s point of view, this account obviously is a no-brainer, just like many other decisions they make at that age. They get to have money on hand for store and online purchases, and they can even look cool getting out their own debit card. What’s not to love?

From a parent’s point of view, there are also some good things about the Paypal Student Account. First of all, it is easy to manage. Only a parent can set up the account for a teen. This is pretty important. The account also allows the parent to choose how much money to place into the account, to monitor every single purchase the teen makes, and also to set up permissions to help keep the spending in check. It even allows for recurring transfers, so that you do not have to add money to the account manually every single time the teen asks (and you know they will). All in all, it is easy to set up and manage, so it will not be much a burden in the long run.

Cons of the Paypal Student Account

I do think, however, that there are far more cons than pros for the use of this account. First of all, there are tons of fees. Sure, if your teen only uses it for purchases online and nothing else, then there will not be many fees attached. However, if you are looking to expand your teen’s understanding of different financial scenarios, then you are out of luck. Paypal will penalize you at every turn with small fees that will add up quickly. I suppose the most inconvenient of all these fees are the ATM fees, as I see those being charged the most.

I think there are some other practical cons to consider here though. Does a teenager really need a debit card? This is totally up to the parents, but Paypal certainly does their best to put the image of a responsible teen (usually looking about college age) and his happy parents in the forefront of your mind. I believe this is to add almost a feeling of guilt, as if “financial freedom” is a right that the teen has. I do not know about you, but a 13-year-old needs no financial freedom, but instead needs to be taught the basics. I do not think an account is appropriate for this age.

Common Sense

Aside from this, there is also the question of why. Why shouldn’t a parent just open an account at the local bank? The bank will charge fewer fees, and will simply be easier to manage. With today’s online banking, you can even move funds without any hassle. So, what exactly is the point? I really fear that an account like this Paypal Student Account is simply too much and too soon for a young teen. It might teach them some important lessons, but also could lead to indulgent spending, too. The account might be easy to manage, but the teen certainly will not be.

However, for a college student, or even an 18- or 19-year-old, this account could have some benefits. This could easily fit well into the life of campus college student, especially one that is trustworthy. Though, this still does not explain the benefit of this account over simply opening a bank account that will have lower and fewer fees, and will also be easy to manage in today’s era of online banking. Overall, the Paypal Student Account could be useful, though it is far from the best option. The link to the official Paypal page for this offer can be found here.

  14 Responses to “What You Should Know About Opening a Paypal Student Account”

  1. I Believe that some of this is true, as of right now, i’m approaching 13 years old, and i think that it’s somewhat a hassle to get a paypal account instead of getting a Bank account, but, for me, i need a paypal account since i am a Graphic Designer and i need to for once have a way to finally earn the money from my art! And i cannot do that with my simple bank account set up by my Mother, and i think it’s a hassle to manage, but if you teach the Child or Teen the proper ways of handling an account on Paypal, then that’s how you start trusting them with the Account. You obviously can’t trust your money or anyone’s money if it’s being handled by a 5 Year old spoiled kid.

  2. I’m am writing this days from paypal shutting down the student accounts. My problem is that my child is 22 years old but can not control money due to his impulsivity issues–He is diagnosed PDD-NOS. I can give him the debit card which he travels around with a $0 balance on the card and only when he needs money do I transfer the money. Bank accounts do not allow you to have a $0 balance. They will close the account in that case. I am seriously needing an alternative and can not find anything close to this. This was an absolute miracle worker for us in the way of money. If anyone know of anything that will allow a $0 balance until I transfer the money, please let me know.

  3. Does the PayPal Student Debit Cards help to build the Teen’s Credit Score?

  4. Beware that the above article contains facts mixed with opinions. I would say the opinions are based on ignorance of how the banking world works and prejudice against young people and their abilities. In other words, my personal opinion is that they’re wrong, or at least unjustified.

    First of all, there are many teenagers that are perfectly able to take care of their finances. The opinion of the author regards to whether a teen should have access to financial instruments or not should be ignored. You should consider your own offspring, not the author’s. As you’re not giving them unlimited access to your bank account, I really don’t see the downside here. Owning an account, debit card and PayPal account at a young age is a huge educational experience. And even if it goes wrong, it’s much better they make their mistakes now than when they’re 18.

    Second, when it comes to fees, they all make sense. PayPal has no fees on things that cost them nothing, and add fees on things that actually cost them. Obviously they add their profit on top of those fees – how else would they make money? They’re not a bank. Chance is, they have to pay when someone uses their card in an ATM, so the cost has to be passed on to the user. When someone pays for an item you’re selling with a credit card, PayPal as the receiver has to pay the merchant fee, which again is passed on to the user. If you set up your own merchant account with a bank, you’ll have similar fees. Really, it doesn’t sound bad at all.
    Recently I transferred some money to a family member, and I used the (UK) bank account linked to my PayPal account. They charged me nothing, as it cost them nothing to do it. Personally, I would say any criticism of the fees of this card in this article is uncalled for, or a great exaggeration at best.

  5. I know this is quite some time later, but this website happened to come up on my search, so I figured if it happens to come up in anyone else’s, my comment could be seen and useful! I am currently 19 and in college, however my mom got me a student PayPal account when I was 17. I’ve had no weird fees in the two years I’ve been using it. I haven’t sold anything online (as a student, I’m not too sure what I would be selling??) and I’ve only made an ATM Withdrawl once (most place take cards).

    Now you ask why not just make the child a bank account? Well, it didn’t make sense. I didn’t have a job, so I had no steady income, so I would’ve had to have some ridiculous minimum balance or make monthly deposits if I don’t want any monthly fees. With PayPal, I’ve had my balance go to zero and stay at zero for a while with no repercussions.

    Another reason why a PayPal account was better than a bank account: transferring money from from my mom’s account to mine was incredibly easy. Whenever my mom opened up her account, she’d see my name with a dollar sign and a box next to it. She just had to enter an amount, hit a button, and tada! I had money! She could also see where I was spending my money, and she received alerts when my balance went below $20.

    Now, you ask why a 13 year old would need to be financially responsible. I’d first like to say teenager is anywhere between 13 and 19, so focusing on 13 year olds is unnecessarily specific.(I would also like to point out that the author of this article ponders why a 13 year old would need to be financially responsible, but at the same time implies this same 13 year old plans to be selling things online??) It’s not a bad idea to teach your child financial responsibility! Considering the fact that most people use credit or debit cards nowadays, the PayPal student card is great for that. I used my card for getting food and hanging out with friends. My mom was out of town a lot for work, so she could easily send me money should I run low even from another state.

    The last thing I’d like to nitpick at is the statement: “Now, just imagine, for a moment, the amount of fees that would add up if parents asked people to put money into their teen’s Paypal Student Account for the teen’s birthday or graduation.” I’ve never heard of anything like this… Do people really just transfer money into teenager’s bank accounts?? I’ve always gotten cash or gift cards if someone wanted to give me money. With neither adults nor teenagers have I heard of people directly putting money into their bank account like that.

  6. I’m an adult considering this for my 15-year-old, and I must agree with the teenaged posters that this article is full of unfair opinions. To the author, please research the term “fair and balanced” and try to refrain from such unprofessionalism in future if you want to be taken seriously as a writer. Stick to the facts.

  7. I have 2 kids who have used the PayPal card for several years, it’s been fantastic. We have never incurred a few, durrrr avoid ATM buy some gum at the store and get cash back derp. It makes allowance easy, saving for school shopping easy and no minimum or way to overdraft. This piece is full of opinion and assumption.

  8. As a minor looking for the chance to open a PayPal account, I jumped at the chance to get PayPal student. While your article suggests that it is unnecessary for an early teen to have an online banking account, I believe quite the opposite. I am sure that many teens can relate to the awkwardness of having to ask your parent for their card, explain what our purchasing and trying to reassure them that their information will be safe; even if you’re just trying to buy a poster! Using PayPal student, you can bypass all of that, and online shopping becomes a lot easier. Parents can easily monitor the account and teens are able to have the financial freedom that prepares them for being an adult. As other reviewers have also commented, I feel that you should have been more unbiased with your review, at least presenting two sides of the argument. The article is titled “What You Should Know About Opening A Paypal Student Account” thus it should focus more on the facts and less on your personal opinions. No matter what you think of a subject, you should try to be more objective with your published works. You do bring up many good points throughout the article, such as the associated fees, but as a user of PayPal student I can honestly say that I mostly use the account for purchases on sites like amazon. This opportunity for teens is candidly one you should take; It is easy for both parents and their children and helps to introduce teens to the technological world they will be dealing with in their adult lives.

  9. As soon as PayPal offered a Student Debit Card I jumped at the chance. I think I jumped aboard the PayPal wagon in 1999 and have used them a great deal. I even have a Debit Card with them that gives back 1 1/2% on purchases. I had been looking for a way to give her her allowance by some other means, other than Cash. I looked at the fees of other PrePaid Cards and was taken aback.

    PayPal has fewer and lower fees and I do not recall my Daughter incurring any fees. Also in reading the fine print, they offer much more security and other protections than the PrePaid Cards do. And I can put limits on its use and setup alerts. I only have a few alerts setup for security purposes. I can also see what and where it has been used.

    She can make online purchases and purchases anywhere Debit Cards are accepted without any fees charged to her. I think the Card is processed through the VISA system as it bears that or the MasterCard logo. Plus anyone looking at the Card would think it was a regular Debit Card. That prestige was important to me.

    Adding money to her Card and takes just minutes.

    Rereading your review, in my opinion I do not think you visited the PayPal site in completing your review. Or did a side by side comparison of the fees with regular Banks or Prepaid Cards.

  10. How about a comment from a 13-year old’s point of view?

    These student PayPal accounts could actually prove to be productive. Nowadays, many teens do make their own purchases. I received my own debit card when I was ten years old, and I have been responsible enough to use it only when I need to. It’s the parents’ decision, whether or not the teen is responsible enough for their own PayPal account.

    Secondly, I’d like to point out that while the fees for local banks are much lower, PayPal is supported by numerous websites as a form of payment. Services like Interac Online, however, are not quite as globally supported.

    Thirdly, this is a pointer to you, the author of this article. I’d just like to point out, as quoted in the article above:

    “I do think, however, that there are far more cons than pros for the use of this account.”

    “I do not know about you, but a 13-year-old needs no financial freedom.”

    “I do not think an account is appropriate for this age.”

    When you are writing a factual article or review on a service, please stick to the facts, and the facts only. Most people, when coming to a review, are looking for such facts, to base their opinions on. They’re usually not asking for you to tell them what’s right and what’s wrong with their choice of parenting. That’s for them to decide. You can use those choices with your parenting, sure. But it’s not up to you to decide what’s good for the child of the parent reading the article.

    • I agree. I’m 13 too, and when my mom reads this, she’ll flip out because of the many opinions. I came here for the FACTS! Not some other crap (excuse my language)! By the way, we, like everybody else, no matter how old we are, need financial freedom also. Just because we’re young doesn’t mean we have to get put down and treated like s*** (again excuse my language, i’m just VERY angry! :P)! And someone should ban this article, because its a blotch of dirt on the Internet’s good reputation.

      • I know how you feel i am a 12 year old student which want a paypal account so that i can purchase things cheaper and more efficient and get what i needed or wanted in a far cheaper price

    • should I make a paypal account? it would be my first bank account, also my first debit card
      { I have had gift cards} and I want a bank account to buy stuff online. and not ask for cash from my dad/mom. and I would need it cause I would be starting to work aka getting a job so where would my check go? so over all should I get a PayPal account? and make this short what fees would I have to pay?{ by the way I am 13-17}

  11. Why might you do this?
    First, because since I no longer carry much cash, it means that I no longer have to get cash out all the time for each child for their allowances. And in practice, they’re not going to be using cash accounts in the real world. They’ll be using debit cards. They’d better learn to manage those.

    Second, why would you not open a bank account for them? Think about it for a minute. Because they can overdraw that very, very quickly. And it’s how much for that when they do? It’s cheaper in the long run to use something like PayPal.

    Third, given that PayPal doesn’t charge for in-US purchases, and charges $1 at ATMs, the fee structure is not bad.

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