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The Prepaid Way
Help Your Teen Learn to Manage Money with Prepaid Credit Cards
By Tamekia Reece
If you're trying to teach your teen to handle money or manage it more effectively, your answer may be as simple as whipping out the plastic – not your credit card, but a prepaid cash card.
Prepaid cash cards (or stored value cards) look much like a credit card, but these cards must be loaded with money before they can be used to make purchases. That means before your teen can buy those cool jeans that she "just has to have," she must have cash to put on the card. "This can help teens learn the value of budgeting money," says Diane Giarratano, director of education for Novadebt, a non-profit financial management service. It can also be beneficial to parents. "Parents have more insight as to what their teens are spending their money on," she says.
Giving your teen a reloadable cash card can help to keep money in your teen's pockets and yours. Because the limit of what can be spent is no more than what's on the card, there are no worries about your teen going over the limit and being hit with overdraft charges. "Stored value" cards can be a life-saver for parents whose teens are spendaholics. "Parents can set a certain limit on the amount available on the card and can give the teen a specific time period before they will replenish the amount," Giarratano says. She believes that these lessons and experiences cause teens to think more about what they are purchasing and prepare them to make sound financial decisions in the future.
