Prepaid Debit Cards - The Perfect Credit Card For Teens
It can be difficult for a parent to just provide their kids their own credit cards
. Parents are usually having second thoughts because they are afraid that their children are not yet ready for this kind of responsibility. What if your child is about to enter college? This is the perfect time to teach them how to handle credit and debt repayment in a responsible way. This is also the best time for them to start building their credit history.
In this article, let's talk about prepaid debit cards and how these cards can be the perfect tools for building early credit history and for teaching kids about proper credit management.
Prepaid Cards - How They Work
Prepaid debit cards are another form of cashless payment. These cards can be used for buying items in stores, supermarket, diners, and other establishments. Prepaid cards can be used to shop online as well. What makes it different from a traditional credit card?
As a prepaid cardholder, you will not be given a credit line. This means, you need to deposit cash into your account before you can start paying with your debit card. When you run out of funds, you will not be able to charge expenses to your card. You must submit a new deposit before you can shop with your debit card. Debit cards are a convenient way to send money or allowance to your teenagers. You can send your child's monthly allowance through your debit account if, let us say he/she is staying in a boarding school. Once the money has been transferred, your teenager can withdraw cash from the nearest ATM. Both Visa (Visa Buxx) and MasterCard (Allowcard ) have issued their own versions of prepaid debit cards for teenagers. What's great about prepaid debit cards is that you don't have to worry about interest rates, overdraft fees or late penalty charges.
Teach Your Teens About Credit Management
How can you help your teenager learn about responsible credit management using a prepaid college debit card? Here are some tips:
Limit their credit usage. You can control the amount of money they are allowed to spend in a month by depositing a limited value in your teen's debit account. Explain to your kid that you will not be sending extra money until the next month so they must wisely utilize their monthly budget.
Let them earn it. Teach your kids about the value of money by making them earn it. For instance, if your teen wants to purchase a new outfit or gadget that is not part of the budget, you may agree to pay only half of the purchase amount and let him/her pay the other half of the price.
Keep track of their spending. You can monitor your teen's spending habits by logging in to the debit account. If you notice signs of overspending, calmly speak with your teenager about it.
Involve your teens. Get your teenager involved from choosing the right prepaid debit card, to reading the fine print, to opening the account. Read the Terms and Conditions together with your child and make sure that he/she understood everything that is stipulated in the contract such as his/her privileges and limitations as a prepaid debit card owner.
Copyright (c) 2009 Tara Tiemann
by: Tara Tiemann
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