Prepaid Allowance Cards for Teens
The old fashioned allowance just got a modern makeover! Teens learn to manage credit with pre-paid allowance cards.
In response to a growing epidemic of financial illiteracy among the nation's youth, many companies now offer, prepaid credit card services — just for the kids.
Visa offers two options: The first for children under 12 (PAYjr Chore & Allowance), which cleverly offers online chore tracking; the second is available for teenagers (read young adults), the Visa Buxx Card. Created specifically for kids and teens, these prepaid credit card systems are part of a larger system featuring online account controls and tools, as well as financial lessons and interactive games designed to teach fiscal responsibility to America's youth.
As parents we need to teach our teenagers about money and credit, now. We simply can't afford to wait. Students today are not being educated on the mechanics of rudimentary finances. How Money Works! The pre-paid credit card can be a strong learning tool for parents to take advantage of.
Take the concept of allowance to the next level. You might ask, "Why should I spend money to enroll in a program that teaches my child to spend money?" Good question.
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A good financial education is essential in today's global economy. Just as you teach your child how to sign his name, write a check and complete a transaction at the local grocery store, learning about stocks, bonds, and investing, should be high on the priority list. These new tools provide lesson plans and parental controls that help teach your child how to manage his or her own money safely and conveniently.
These pre-paid cards are the first form of plastic specifically designed for kids and teens. No more asking for money for shoes, school supplies and a night out at the movies — now parents can put a pre-determined amount of money on the card each month — and kids can use it accordingly. The system also has parental control options so families can limit the way the card is used (unlike ATM cards.) Normally there are no finance fees, interest rates or overdraft fees — teens cannot overuse!
These allowance prepaid credit cards are aimed primarily at youth -- and is geared toward helping them get a grasp of their allowance and finances, establish a better sense of trust with their parents and learn valuable life lessons, while still giving them financial independence. Further, the personalized card is accepted at millions of locations that accept Master Card or Visa debit cards, making it a convenient way to pay for everyday items.
Parents will have a better way to give and track allowance monies using this hands-on financial training tool, and our youth will have a better way to pay for their needs that is safer than carrying money.
Pre-paid Credit Card Opportunities
- The PAYjr Visa Buxx Card, PAYjr Chore & Allowance System
- UPside Visa Prepaid Card
- Discover Student Credit Card
- AccountNow Prepaid Visa Card
The heart of the allowance prepaid credit card program is its online portal. From there, parents can load finances to the prepaid card from any credit card or checking account, 24-hours a day, seven days a week. That way, teens are assured access to their allowance when they need it. Because of the nature of the debit system, teens can't over spend their account and rack up debt. Another feature — NO overdraft fees.
Before for you decide that is just a card and doesn't have any real advantages. Consider Michael McCoy:
Michael McCoy received a text message a few weeks ago that his 15-year-old son had just spent $8 at Subway at a time when his son was supposed to be at a friend's house.
McCoy's alert came through San Diego-based BillMyParents, the company he helms, which gives parents immediate information about how their children are using prepaid cards with Mastercard logos.
"It created what I call a coaching opportunity," McCoy said."It was not only about how he was spending his money, but also about where he was when he was supposed to be somewhere else." [Read more...]
Disadvantages of prepaid cards
There are a few draw-backs and disadvantages to using prepaid cards. Many cards require a start-up fee. This fee may be minimal for many companies, but some of them are substantial. The biggest disadvantage is that prepaid cards may not be accepted by every business. Businesses that accept automatic payments from bank or credit card accounts will not accept them from prepaid cards. Therefore, just like when you are selecting a normal credit card, it is best to do some research and view the pros and cons before opting for the prepaid card of your choice.
Parents are cautioned, just as with any new credit card offer that you review the terms of service carefully, including all disclosures. Then take proper steps to insure your student understands how to use the card, including the benefits and disadvantages of using the card. Approached with the proper attitude, open communication and instruction, financial lessons can be fun for everyone involved.
Parents should understand that learning how to be responsible with money doesn't come natural to kids in our consumer society. Expect your child to make some bad decisions. Be prepared to evaluate the situation, sometimes natural consequences are better teachers than anything a parent can say or do.
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Updated January 14, 2011