One thing that is sure to make any parent nervous is the thought of their child having a credit card. In recent years, credit card companies have been actively targeting young adult and as a result the number of teens using plastic has increased dramatically. Take a walk across any college campus and you will find numerous credit card companies passing out card applications. Just about every retail store offers a special discount off your purchase when you apply for one of their store cards. Since prepaid cards are our specialty and there is all this hype about plastic, it has prompted us to consider if prepaid cards are a good idea for kids?
There are many reasons to use a prepaid card. This article will highlight some of the pros and cons for when it comes to kids using prepaid credit cards. There are many advantages and disadvantages too. Parents ultimately get to make the final decision because for one, your the parent, and for two you have to be 18 years old to apply for a card. With that being said take a look at what we believe to be the good points and not so good points about kids and cards.
Advantages of prepaid for kids
- They can be used anywhere Visa or MasterCard are accepted.
- They are safer to carry than cash. Cards can be deactivated and replaced, whereas cash is irreplaceable.
- They can be used for internet purchases
- Safer for kids than credit cards which card interest and can have costly fees.
- The account can not be overdrawn
- A great way to teach your child how to budget their money
- You can use the card to get cash from an ATM if needed.
- Prepaid cards have low fees and maintenance costs
- Guaranteed approval
- Way to introduce the concept of credit
Disadvantages of prepaid cards for kids
- If the card is used to get cash from an ATM there will be a fee. Children need to understand these type of fees because it will lower their balance.
- You have to load fees onto the card before using. This could be inconvenient in certain situations.
- Sometimes a fee will be charged when you add or load money to the account
- If your card is lost or stolen they will most likely be a fee for a replacement card.
- You have to be at least 18 years old to apply for a card.
- Most prepaid credit cards require a fee to set up the service.
Teaching Responsibility
Using a prepaid card can help overcome the image of “free money” that young kids often associate with credit cards. A suggestion would be to help your child set up a system to track their purchases. Some prepaid cards give online account access which would be a great place to start. If your child gets an allowance or is old enough to have a job, they can use their own money to load the card. Nothing teaches money management better than when you are young and you have to use your own money to buy the things you want. Prepaid cards can be a great tool to use for budgeting. All in all we think prepaid cards can teach kids some value lessons about money. However, parents need to be ones to instill the importance of a healthy relationship with money. Teaching children at a young age and using some of the tools we have available today, like prepaid cards, can get your child started off on the right path when it comes to managing their money.
As with every product, people should shop around to find the best prepaid cards for teens.
The UPside Visa cards for teens do not charge any activation or purchase fee, nor charge any fee for loading funds from a parent’s checking or savings account.
One of the UPside plans has no monthly fee, which makes it essentially free to both parents and teens (the issuer makes money on the interchange paid by merchants)
Parents who want to sign up their children above the age of 13 can simply go to UPside Visa.