One of the best range of financial products in the market today are prepaid credit cards for teens. Let's face it, we live in a consumer society, and teens are encouraged to spend just like everyone else. But there's no reason to give your teen a credit card when there are prepaid credit cards for teens on the market. They are the best way to give teens the plastic they feel they need to have to fit in with their peers but still teach responsible spending habits which will serve them well throughout their lifetime.

How to prepaid credit cards work? The name says it all really, they are cards that can be used just like any other credit card but they will only work if there are funds available on the card. Unlike credit cards which can operate on a negative balance, prepaid credit cards will only work on a positive balance.

Prepaid credit cards for teens in practice

Let's say you have a 16 year old who is itching for a little more independence and has been asking for a credit card of their own – "Everyone has one except me". You're understandable worried about the spending habits this will teach them and look for alternatives. You hear from a friend about a financial institution that is issuing prepaid credit cards for teens, and decide to look into it further. A prepaid credit card works just like a prepaid phone card – as long as there is credit on the card then it works just fine – but if there's no credit on it, you'll have to top it up with fresh funds.

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A prepaid credit card works just like a regular debit card, but with the added functionality of being able to conduct some transactions which require a credit card. Therefore a prepaid credit card for teens will encourage young people to save, budget and spend within their means instead of living beyond them. For example if a new outfit or a trip to the movies is on the radar, the onus will be on the young person to budget and save for the occasion, and ensure that there are sufficient funds available on their prepaid credit card.

The best thing about prepaid credit cards for teens without a doubt has to be the credit card like functions of the card. It allows teens to conduct transaction, and teaches responsible financial independence and living within their means. For young people about to reach adulthood, prepaid credit cards for teens are an ideal way to build the foundations of responsible spending and accounting.

Sure, you can give your teen a credit card, but it will be in your name. What lessons does that teach? It tells the young person that it's OK to spend someone else's money irresponsibly. It teaches them that they can spend right now without being concerned where the money will come from. A prepaid credit card for teens eliminates that issue, and will set young people on the path of financial success.