Prepaid Cards for Teens – An Effective Money Management Tool for Teens

Many parents resist the idea of giving credit cards to teens. They’re not sure they are ready to handle the responsibility. There is an option that can even be used as a learning tool for teaching fiscal responsibility. Prepaid cards for teens can provide parents with a simple means of placing spending limits on their kids while at the same time teaching them how to handle money and credit.

As you may know there is a difference between a credit card and a prepaid credit card. A credit card is what most of us use and provides the card holder with a pre-arranged line of credit with a lending institution. The credit card holder can spend this money anytime, anywhere, agreeing to pay back the amount in full, plus interest, by making at least a minimum monthly payment.

By contrast, using prepaid cards, does not involve borrowing money. Money must first be deposited into an account before the card can be used. The card holder can only spent the amount of money that has been deposited. Funds can be added to the card and no credit check is required to get this type of card.

Some people call prepaid cards for teens “preloaded cards” or “debit cards”. They are all pretty much the same thing. Different cards provide different options for parental monitoring and control. A parent, in some cases, can monitor how and where their teen uses the prepaid card. Additional funds can be added to the card.

Now that we have established the differences between credit cards and prepaid cards, let’s take a look at the similarities. Prepaid cards basically perform the same as credit cards as far as being able to make purchases are concerned. They can be used to buy things online, place orders over the phone and of course, purchase things in stores, restaurants, movie theaters, etc., etc.

One of the biggest advantages to prepaid cards for teens is that they can be used at an ATM. Therefore, the teen has easy access to cash in an emergency situation. Money can be added by the parents quickly if needed so even if the teen is stranded somewhere out of reach, the parent can’t provide them with the cash they need.

There are fees involved when you use prepaid cards for teens. An annual fee is often charged or a monthly fee. There is usually a withdrawal fee and a fee if you want a printed monthly statement. A card that is not in use is not charged any fees.

If you use this great option for teaching your teens how to handle their finances and credit card use and providing them access to money, be sure and find out the terms and conditions. Each of the prepaid cards for teens is different depending on the issuer. You will want to select one that works well for your particular teen and financial situation.

See for yourself how prepaid cards for teens teach responsible spending habits. There are a great many benefits for using prepaid credit cards for teens that warrant a closer look at these financial management tools for teens.