Teenagers with Credit Cards: A Financial Lesson or a New Market for Credit Cards?
Is handing your child a prepaid credit card a good lesson in personal finances? Credit cards aimed at younger teenagers are being advertised as an opportunity for parents to monitor spending and to set spending limits, while giving teenagers flexibility and spending independence. Parents are encouraged to load money for allowances and chores onto the card; teenagers are then able to use the card just like a credit card and to spend up to the pre-set limit.
"I don't think the early use of credit cards is wise instruction for money management. Before we teach kids how to spend, we need to teach them how to save," says Bill Hardekopf, CEO of Lowcards.com. "They need to know how to designate a percentage of their money for spending, but more importantly, a larger percentage needs to be saved. They need to learn how to save money in their own bank, to watch it accumulate, and then take the cash to make a purchase."
"We value our money much more if we are actually spending cash and not just whipping out the credit card. We are much more careful with our purchases if we realize that the money is actually gone after we make the purchase. The pain and anxiety from an empty wallet is a very good money management lesson, using a credit card avoids that altogether."
The prepaid cards are aimed at teenagers as young as 13. They even encourage families to use their service to monitor chore completions and payments for children younger than 13.
"Parents don't need a credit card to help them monitor chores and to hand out allowances," says Hardekopf.
"Even though the marketing for these cards makes them sound harmless and even helpful, do we really need to be teaching our kids how to use credit cards this early? Credit cards issuers are smart; they realize this is a good way to get kids hooked on credit cards at a very early age and issuers are hoping that brand loyalty is established for a lifetime," says Hardekopf.
Of course there are fees for using these cards. PAYjr charges a $4.95 enrollment fee, a $2.95 monthly maintenance fee, and a $.50 load feeper each load. Payoneer charges a $9.95 activation fee, a $3.00 monthly fee and $1.35 ATM withdrawal fee, $5.00 for the first load and$2.00 for all other loads. Allowcards charges a $19.95 activation fee, a $3.50 monthly fee and a $3.95 shipping fee.
LowCards.com ( http://www.lowcards.com ) is a website that helpsconsumers easily compare credit cards in a variety of categories suchas lowest rates, rewards/rebates, and lowest intro rates. It also gives an unbiased ranking and review for each card. Created byHampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for over seven years.
"I don't think the early use of credit cards is wise instruction for money management. Before we teach kids how to spend, we need to teach them how to save," says Bill Hardekopf, CEO of Lowcards.com. "They need to know how to designate a percentage of their money for spending, but more importantly, a larger percentage needs to be saved. They need to learn how to save money in their own bank, to watch it accumulate, and then take the cash to make a purchase."
"We value our money much more if we are actually spending cash and not just whipping out the credit card. We are much more careful with our purchases if we realize that the money is actually gone after we make the purchase. The pain and anxiety from an empty wallet is a very good money management lesson, using a credit card avoids that altogether."
The prepaid cards are aimed at teenagers as young as 13. They even encourage families to use their service to monitor chore completions and payments for children younger than 13.
"Parents don't need a credit card to help them monitor chores and to hand out allowances," says Hardekopf.
"Even though the marketing for these cards makes them sound harmless and even helpful, do we really need to be teaching our kids how to use credit cards this early? Credit cards issuers are smart; they realize this is a good way to get kids hooked on credit cards at a very early age and issuers are hoping that brand loyalty is established for a lifetime," says Hardekopf.
Of course there are fees for using these cards. PAYjr charges a $4.95 enrollment fee, a $2.95 monthly maintenance fee, and a $.50 load feeper each load. Payoneer charges a $9.95 activation fee, a $3.00 monthly fee and $1.35 ATM withdrawal fee, $5.00 for the first load and$2.00 for all other loads. Allowcards charges a $19.95 activation fee, a $3.50 monthly fee and a $3.95 shipping fee.
LowCards.com ( http://www.lowcards.com ) is a website that helpsconsumers easily compare credit cards in a variety of categories suchas lowest rates, rewards/rebates, and lowest intro rates. It also gives an unbiased ranking and review for each card. Created byHampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for over seven years.
Posted by Lynn at
10:06 AM
Links to this post:
Create a Link
<< Home