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Prepaid Credit Cards for Kids, Best Ideas for Parents?

By Edited Nov 13, 2013 0 0

Prepaid credit cards are an excellent idea for children of a certain age. They can be an extremely useful tool for parents to teach their kids how credit cards work and the importance of not spending more than you can afford to pay back. They can also teach children about interest and how it increases their payments. How paying off interest every month isn't the same as paying down your credit balance. I wouldn't recommend it for just any kid, but for teenagers in their later years of high school it can be a great tool to prepare them for college and how finances work in the real world. - Glenview, IL


The idea of giving a prepaid credit card to kids is not a good idea at all. You are not helping them in any way. A child should not have access to money anyway, if they don't work they will grow up to believe that money will be given to them.If you child wants money tell them to work for it, open a lemonade stand or something. If your child is 16 years old tell them to find a job, they will learn more by working and getting there own money then you can teach them by giving them money. you should by them a basic finance book for their 15th birthday it will teach them about money and how to make it and use it wisely. - San Diego, California


The main problem I have with prepaid credit cards is that they come with fees. Lots and lots of fees. You have an activation fee. Most prepaid debit cards come with monthly service fees. Some cards will charge you a fee if you use an ATM (even the issuer’s ATM) to check your balance. You even pay a fee when you reload the card. All of these fees start to add up. You could easily pay more than $100 a year in fees on a prepaid debit card. - San Francisco


The idea of Prepaid Credit Cards for Kids is good and bad. The prepaid card would teach controlled spending habits. Having a set maximum limit on the card would also be beneficial. Checking the account balance online is ideal to check on the child's spending habits. From checking the online account the bad habits can be discussed with the child and changed to made towards good spending habits. - Buffalo, MN


The idea of kids running around with credit cards gives me the same feeling as when I see kids with cell phones. I don't like it. I'm not sure how a credit card would help a child start to understand the value of money any more than actual money would. In fact, money seems better because they they have the visual representation and can practice counting. Numbers on a screen or paper might be harder. Also assuming the credit card works normally, it would give kids access to buying things online. Parents should obviously supervise younger children if they're using the internet anyways, but it still could cause problems. I just don't see there as being many situations where a child would need a credit card instead of cash, nor do I see it as making anything better or easier for the child or parent. - Pasadena, California


When kids reach a certain age, they start exerting their independence. They want to go to the mall with their friends instead of Mom and Dad. Before you know it, they are starting to drive, and need money for gas and other teen necessities. Unfortunately, kids get more expensive as they get older, and somehow a parent's pocket-change doesn't always keep up with their needs. - San Jose, California


The idea of using prepaid credit cards for kids is great because it provides a way for parents to control and monitor their spending. Generally, prepaid credit cards require a cash deposit to the card, so only what is available on the card in the first place can be spent. Credit cards without this feature are not good for teenagers and young adults because they can quickly stack up debt before they are able to build credit. The other reason it is a good idea to use prepaid cards for kids is that it can be used to teach them about limits with spending and budgeting their money. I would not give my child, teen or young adult my credit card. - Palm Springs, California


The idea of giving children prepaid credit cards seems ridiculous at first glance but thinking a bit more I can see some wisdom in the idea. Kids absolutely need to learn about money early. Children need to learn to budget. If mom and dad are a never ending fountain of money and things, kids don't learn anything realistic about finances. To just complain to them that things are tight means nothing. Parents should decide on a budget for their kids that is reasonable for both them and the child. They should then explain to the child that this is their money for the month to cover whatever the parents decide it should cover. Make the child understand this is it for the month. Parents then need to stick to the plan and not cave in when Becky spends all her money on an expensive pair of jeans and can't afford school lunches. Becky needs to take a sack lunch at that point and learn her lesson. This is not punishment but lessons learned. I would never give my child access to my credit card. I think it's nuts for anyone to do that and expect to not pay heavily. A prepaid card is totally different. It's not credit and once it's gone it's gone. Bay City, MI


One of the biggest threats that exists today for our children, is the risk of being overwhelmed by the consumerist American society. Prepaid cards are not a good way for parents to manage their child's finances because they are teaching their children to always use a card to make purchases. There must be a new trend among people to pay for products and services with cash. Children and Teenagers do not need a loan and a credit card because they lack the capacity of understanding the significance of interest rates. I will not give my children access to credit cards because I will teach them to only use cash and I would not trust them to understand the perilous effect interest rates can have on one's finances. - Saint Paul, MN




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