The concept of giving a credit card to a teenager might seem a little strange to some people. After all no-one wants to teach their youngsters bad habits. However, prepaid credit cards actually offer an excellent way of teaching your teen to manage money while allowing parents to retain control and monitor what’s being bought and how money is being spent.
Prepaid cards have a number of benefits which a traditional credit card does not. The primary one being that there is absolutely no way that you can go into debt with this type of card.
A prepaid card is exactly that – it is pre-paid. You load the card with money first, and then spend it which means that you have the ability to spend money on things that require a credit card (such as booking gigs online for example), as well as the choice offered by being able to shop around further afield by using the internet, but you don’t have the risk of over spending that is traditionally associated with using a credit card.
Understanding how a prepaid credit card works is reasonably straight forward. You take money from your own bank account or wages, and load it onto the card. You get to choose exactly how much you put on there, and how you spend it. After this, it’s used very much like a credit card to make purchases, and as most of these prepaid cards are backed by either MasterCard or Visa, they can be used in many thousands of stores world wide. As you shop, your card balance goes down and when the card no longer has enough on it to purchase what you want, you then load it up again before you can spend more.
For any teen or young adult the ability to get used to budgeting and be able to use a credit style of card without the risks of getting into debt is brilliant. It means that you as a parent can help them to avoid the pit falls that exist with credit cards, but still show them how to shop around for the best value deals.
Of course every company wants to make money from their card, so there are fees involved with pre-paid cards. The difference is that it’s much easier to see up front what these are. Some cards charge a monthly fee to allow you to keep the card active, while others charge you a small fee every time you use the card. The fees are generally taken from the balance of the card however, so you don’t have to find these separately, you just have to remember to budget them into your spending, and make sure you know before you begin how your chosen card works.
Prepaid cards can be excellent ways of helping people to establish good money management and budgeting skills, but you’ll still need to pay attention to what you are spending and how much is left available on the card.
Some good cards on the marketin include – Splash and bread card