Prepaid Credit Cards for Teenagers
Have you been wondering how you can teach your teen to behave responsibly when using a credit card? No parent wants to see their child get into financial difficulty running up debts that they cannot afford to pay off, yet many of us know from experience how easy it is to succumb to the temptation of thinking that we can afford to buy now and pay later. Of course we learn through bitter experience that this is not always the case and we don’t want our children to make the same mistake.
One way of helping them learn to manage their finances is to give them a prepaid credit card. Technically of course, this is a debit not a credit card as the card is pre-loaded with cash.
There are a number of reasons why you may decide to get your teen a prepaid card. It may be that you simply want them to learn how to manage their own money and by topping up their card on a monthly basis they will hopefully learn how to budget. Your teenager may be going to university and you want to be sure that they have sufficient funds when they need it, for example a quick phone call to you means that you can top up the card in an emergency . Or your teen may be off on a gap year and you can rest easy knowing that funds will reach him quickly if needed.
There are several advantages to a prepaid credit card.
There are no credit tests needed to obtain one, anybody can apply.
It is impossible to run into debt, only the amount credited to the card can be spent.
If the card is stolen only the outstanding cash on it could be lost, although most cards can be blocked in these circumstances.
The disadvantages are minor, normally there is an application fee when getting a card.
Many cards charge a monthly fee, but this is could be cheaper than a teenager running up interest charges on an ordinary card!
Most cards allow withdrawals from an ATM machine, but charge a fee. These charges vary from company to company and it is worth shopping around to find the best buy to suit your circumstances.
There are a lot of cards now being offered and you should read all the terms and conditions carefully to ensure that you are getting what you require. Check there is no delay in being able to use the card as soon as it has been topped up, that you can withdraw from an ATM machine or use online. Well known names offering a Mastercard will probably cover all your needs. Be careful that you are not buying a non-reloadable gift card.
If you choose carefully and explain to your child that the money you will be depositing
on the card is to cover a certain period of time and they must try to budget, hopefully they will begin to learn how to do just that!
This article is for information and the author accepts no liability for any action taken.