Prepaid Debit Cards – The Perfect Credit Card for Teens

A lot of parents are hesitant about handing credit cards to their teenagers due to the risk of bad debt.  Surveys prove that teenagers are more prone to overspending especially since most of them do not pay for their own charges.

In this article, let’s discuss how prepaid debit cards can be the perfect tool for teaching young people how to handle credit without falling in the trap of uncontrolled debt.

Prepaid Cards – How They Work

A prepaid card can be used for purchases from a regular store or an online store much like a traditional credit card.  It is cashless form of payment.  However, instead of paying for your balance at a later time, a prepaid cardholder must first deposit cash in his/her account before charging expenses to the card.  In short, you can’t use your prepaid card if you don’t have existing funds.

Prepaid debit cards can also be used for sending and receiving cash to people from afar.  Instead of paying a wire money transfer service, you can send money to your family members using your debit account.  Once sent, the recipient can withdraw the money from a nearest ATM.

Both Visa (Visa Buxx) and MasterCard (Allowcard ) have created their own versions of prepaid debit cards especially for teens.  Unlike credit cards, prepaid debit cards do not have interest rates, overdraft fees or late penalty charges.

Teach Your Teens About Credit Management

If you are a parent, here are practical tips on how you can train your teenagers on how to manage credit responsibly:

Limit their credit usage. Deposit only a limited amount of cash in your teenager’s debit card.  They should know that once their available balance is spent, they will need to work their own budget.

Let them earn it. Parents can set house chores or tasks for their kids to help them understand about the value of work and money.

Keep track of their spending. Parents can easily monitor their teen’s spending habits by simply logging in to the account.  Most debit card issuers provide an online account access for easy checking.

Involve your teens. When choosing a prepaid debit card, get your kids involved.  In comparing different debit cards in the market, study possible choices with your child.  Read the fine print or the Terms and Conditions together.  This way, your teen will be aware about the costs in maintaining the debit card as well as its limitations.

About the Author

Tara Tiemann is a credit analyst for which has been a resource site for people who want to live debt free. If you are on a budget using prepaid debit cards,prepaid credit cards and prepaid cell phone service can save you big money!

About Liz Roberts

Liz Roberts is the new credit specialist for Go-Prepaid. If you are on a budget, we can get you discounted cell phone service from Sprint, Verizon and T-Mobile! NO CREDIT CHECK ! Using a prepaid services can save you a TON of money! Follow our blog to find out how!

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