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Money Bargain Ideas :: Prepaid Credit Cards For Teens
Prepaid Credit Cards For Teens:
Why Prepaid Credit Cards are a Bad Idea for Teens
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Are prepaid credit cards for teens really a good idea? Before you buy your child a prepaid credit card, keep reading to learn about the disadvantages of this fee-heavy system.
Kids Can Get Hooked on Plastic
While a prepaid card could help teach children to use credit wisely, it can also get them hooked on plastic from a young age. This idea that everything can be paid for with a card is a dangerous concept that parents should take seriously.
It Disassociates the Kids From Cash
While hooking them on plastic, prepaid credit cards for teens also disassociates the kids from the reality of cash. Instead of having ten $1 bills that they can literally see depleting every time they go to the store and buy a candy, they have a card with some unknown balance that's impossible to track.
Not only is it hard for kids to learn how to keep track of their money, it also completely separates them from the idea that money is real and has a physical value.
Service Fees
Because these cards don't make any money off potential interest rate charges, they need to earn their fees through exorbitant service charges. Some cards, like the MuchMusic card charges users a hefty monthly service fee of $7.99 per month.
Others charge a percentage of every purchase. Many of the cards also come with an issuing or start-up fee that ranges from a few dollars to as much as $50.
For example, the new Debix Mastercard system designed for teens and new college students has a setup fee of $7.95, but then charges you $3 every time you want to load the card by cash or check and $9 if you want to do it by credit card. The great thing about cash is that it's free.
Unknown Purchases
Unless parents are able to carefully track purchases, prepaid credit cards for teenagers can open a lot of doors on the Internet. Whether it's illegal materials off eBay or access to a pornography, a credit card can buy them all.
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