I can still remember my first ATM card. I was a teenager in high school when ATM and debit cards first arrived on the scene. I had a passbook savings account with our local bank, and they issued a debit card that I could use to make deposits and withdrawals to and from my account. Taking money out of my account when the bank was closed was nothing short of amazing. But my ATM card of the 1980s was a lot different than debit and prepaid credit cards for teens today.
The most important difference was that it was not part of the VISA or MasterCard debit network. When ATM cards first came out, they could only be used at a bank automatic teller machine. I couldn’t use the card at a store. And of course there was no Internet, so we couldn’t check our account online, either. On top of that, the debit card didn’t work with all ATM machines. You had to make sure that the ATM was on the same network as your bank, or the card wouldn’t work.
With the advent of the Internet and the VISA and MasterCard debit networks, a whole new generation of financial products was born. And recently, companies have begun using these tools to market debit and prepaid cards and other financial products to teens.
If you are looking for a prepaid card for you teen, I’ve listed some of the more popular offers below.
What’s Special About a Prepaid Card for Teenagers?
Nothing. Prepaid debit cards are prepaid debit cards. Those marketed specifically to teens, college students or families work exactly the same way as other prepaid cards.
Some prepaid card companies, however, add extra features that can be enticing to parents. The primary feature enables parents to track and monitor how their teenagers are using the card. This might be ideal for a 13 year old, or totally unnecessary for a college sophomore. Regardless, it’s a common feature among prepaid cards specifically marketed to teens.
A second feature is the ability to get multiple cards that enable parents to transfer funds to the child’s card. This feature, however, is available with many prepaid offers, not just those aimed at young adults.
The point is that for many families, a standard prepaid card has all the features that a teenager or college student needs. If that’s the case, the key determining factor will be cost. For that reason, I’ve included some low cost options below. They are specifically marketed to young people, but they may be perfect for what you need.
Best Prepaid Cards for Teens and College Students
FamZoo Prepaid MasterCard
For families looking to help their teenagers manage money, this is THE prepaid card of choice. I’ve personally met the founder of FamZoo, and this card is built from the ground up with teens and families in mind.
With FamZoo parents and teens each get a card. Parents have complete visibility into all transactions. Parents can also transfer funds between cards, which is ideal for allowance or other incentives.
Finally, the cost is very reasonable. A family of four can have cards for each family member for as little as $0.63 per card per month.
Related: 5 Savings Accounts Designed for Children
Card.com Prepaid Cards
Card.com offers prepaid cards with multiple brands. In addition to the Betty Boop card shown here, they offer branded prepaid cards ranging from the Walking Dead to Sesame Street. As a result, these cards can appeal to children and teenagers of all ages. The fees are reasonable, and the card can even be used with no fees depending on how much is loaded to the card each month.
The Visa Buxx Card is a prepaid, reloadable card designed specifically for teens. The card enables parents to add money online that teenagers can then spend with the card. While Visa Buxx card is not a credit card, like most debit cards, it can be used anywhere Visa is accepted.
Parents can obviously control the amount of money that’s put on the card, and they can also monitor spending via the Internet. Visa Buxx claims that the card gives teens financial independence and helps them learn money management by requiring them to manage the available money on the card. Parents can also pay allowance to teens through the debit card’s automatic loading feature. Parents can setup automatic transfers from their checking account on a weekly or monthly basis.
As for teaching teens financial responsibility, here is what Visa Buxx has to say:
Using a Visa Buxx card is a first step—and a big responsibility—for your teen. When you sign up your teen for their Visa Buxx card, encourage them to take this money management quiz, as well as review the educational information that is included with each card. Taking the quiz and going over the materials together will help to prepare your teen for the real world of managing a budget and using a Visa Buxx card.
The Visa Buxx card is issued through one of several banks that Visa Buxx has partnered with. There are fees associated with the card, including the following:
- One-time Enrollment Fee is $4.95 and will be assessed at the time the Card is opened.
- A monthly fee of $4.95.
- A charge of $5.00 will be assessed to replace a lost or stolen card.
- A $2.00 fee will be charged for each transaction that loads money onto the Card. This fee is typically waived if the card is loaded from an account with the same bank that issued the card.
- An overdraft charge of $20.00 will be assessed for each transaction which causes the available account balance to overdraw the accrued Card funds
- A charge for ATM cash access of $1.50 will be assessed for each transaction in excess of two (2) within the previous 30 days
- A charge of $2.00 per month will be assessed after six months of inactivity.
As you can see, the one big downside are the fees.
UPside Prepaid Visa for Teens
The Upside Prepaid Visa is another option for teenagers and college students. The fees are reasonable, it offers rewards points based on purchases, and parents can easily add funds and monitor spending. The card offers e-mail alerts for low balances, and it’s a perfect way to send money to college students living far from home.
TD Go Reloadable Prepaid Visa® Card
For those looking for an option tided to a traditional bank, the TD Go Visa is a reasonable choice. The card offers the following features for parents:
- It’s a safe, easy and convenient way for your teen to make purchases wherever Visa is accepted.
- You can monitor your teen’s spending online, plus you can set up email and text alerts that notify you about the card’s remaining balance and other account information.
- You can track all of your teen’s spending in ‘real time’.
- You can easily load funds and check the card balance at anytime, either online, or over the phone.
- Your teen can add the card to Apple PayTM for more ways to pay.
Teen Prepaid Debit Card
The last card on our list is also from a traditional bank. The Teen Prepaid Debit Card from BB&T. It too offers parental controls for a reasonable price–$3 a month. If you live near a BB&T Branch, ATM withdrawals are free. It also offers online bill payment and text alerts.
Are Teen Debit Cards a Good Idea?
My question is whether these new financial products are making teenagers more responsible with money, or less responsible. My concern with these products is that their focus is on spending money, not saving or investing money. I’d like your take on this question, particularly if you’ve used any of these tools.
In the press, reviews of the teenager-focused financial products have been mixed.
Liz Pulliam Weston at MSN believes teen debit cards can teach children to be financially responsible. Because these cards are not credit cards, there is no risk of spending over limits, interest charges, or a negative impact on a teenagers credit history. Liz also points out the benefit of parents being able to easily monitor how their children are spending their money.
Taking a less sanguine view of debit cards for teens, Janet Bodnar over at Kiplinger’s believes debit cards serve only to prime our children for life of credit and debt. As Janet explains, “These cards aren’t credit cards, but young people don’t draw a distinction. To them, any plastic is magic money that’s meant to be topped up by Mom and Dad when it runs out.” She also points to the fees associated with these cards.
So what’s your take? Do these teen-focused financial products teach our children sound money management, or set them up for a life of living beyond their means?