The Prepaid Card for Kids

We just received another offer for a branded prepaid, reloadable, card for our kids: convenient when teens need money and parents don’t have cash on hand; and cash can be lost or stolen.

Leaving aside the slightly disturbing marketing that envisions us having teenage kids right now, I’m a firm believer in financial education for every age, and take any opportunity to share or instill good habits so I took a closer look at the educational possibilities this presents.

Somewhat similar to the starter checking accounts a friend once had back when we were 16, this sort of card gives teenagers limited credit card-like freedoms: the ability to pay with plastic, see their purchases tracked online (as do the parents), and receive email alerts about card activity.

The letter was geared toward the parents, but I would expect that the email alerts could be shared with the kids.

The cards are reloadable, has an ATM access feature that can be turned on or off at will, and most of these offers across brands seem to come with loss or fraud protection.

The potential problems I could see in sending my fictional children out into the world with this card would be if I hadn’t taught them about the more fundamental lessons about money. If I’m just loading them up on prepaid cards when they haven’t learned anything about the value of money, decision-making in shopping, bargaining, or how marketing and advertising works, that would be problematic and they would be learning more of those lessons the hard way. But that leads into a whole other conversation about Nature vs. Nurture and the kind of spending/saving personality they might have as well, I think.

After reading through all the promotional information, I didn’t find any mention of fees or how the card issuers make their money, so that’s not entirely clear.

What are your thoughts? How do you feel about these products that closely mimic financial instruments that will be readily available once kids are of age?

About Revanche

Revanche writes the personal finance blog A Gai Shan Life.