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.

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

  1. 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.

  2. 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.

  3. 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.

Leave a Reply to LapisUniverse Cancel reply