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. Taking money out of my account when the bank was closed was nothing short of amazing (oh, simpler times). However, my ATM card of the 1980s was a lot different than the debit and prepaid credit cards available for teens today.
The most important difference was that it was not part of either the Visa or MasterCard® debit network. When these cards first came out, they could only be used at a bank automatic teller machine. I couldn’t use the card at a store. Of course, there was also no internet, so I couldn’t check my account online either.
On top of that, the debit card couldn’t be used at 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. As exciting as this new piece of plastic was at the time, its capability was fairly limited.
With the advent of the internet, as well as the Visa and MasterCard® debit networks, a whole new generation of financial products was born. More recently, companies have begun using these tools to market debit and prepaid cards — as well as other financial products — to teens, too.
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.
So, why bother with these “teenager” cards? Well, some prepaid card companies add extra features that can be enticing to parents. The primary special feature enables parents to track and monitor how their teenagers are using the card. This might be ideal for your 13 year-old, but totally unnecessary for your college sophomore. Regardless, it’s a common feature among the prepaid cards that are specifically marketed to teens.
A second feature is the ability to get multiple cards on the same account, which enables parents to transfer funds to the child’s card. This feature, however, is available with many prepaid offers out there, 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 the cost. For that reason, I’ve included some low-cost options below. They are specifically marketed to young people, but they could be perfect for whatever you may 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 get a card. Parents have complete visibility into all transactions, and can even download their app for quick reference. Parents can also immediately 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.
American Express Serve®
This card comes with options, one of which includes earning rewards on your teen’s purchases (just like mom and dad’s cash back credit card!).
The American Express Serve® comes in three flavors. All three come with:
- Free Early Direct Deposit
- Free online bill pay
- Free money management tools
- Free cash withdrawals at over 24,000 MoneyPass® ATM locations
- 24/7 customer service
- Free card replacement
The basic American Express Serve® card has no monthly fee if you direct deposit at least $500 into the account each month (otherwise, the fee is a mere $1/mo). Cash reloads start at $3.95, depending on the retailer, though it’s always free to add funds from a bank account.
If you see yourself making reload deposits at retail locations, those fees will add up — so you should consider the next tier card, the Serve® FREE Reloads card. The monthly fee for this version is $4.95, but includes complimentary cash reloads at over 45,000 locations, including CVS, Walmart, and Rite Aid.
The really exciting part of this card series is its third flavor, the American Express Serve® Cash Back card. The monthly fee for this version is $5.95, but it includes an unlimited 1% cash back on all purchases. While this isn’t the wonderful 5%+ cash back that many of us look for in a credit card, it’s still a great perk to have in a prepaid card (especially one for a teen).
TD Go Reloadable Prepaid Visa Card
For those looking for an option tied 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, complete with chip technology for fraud protection.
- 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.
- Easily load funds and check the card balance at anytime, either online, or over the phone.
- Your teen can add the card to Apple Pay™ for more ways to pay.
BB&T LEAP® Account Card
The last card on our list is another option from a traditional bank: the Teen Prepaid Debit Card, also called the LEAP® Account Card, from BB&T. It too offers parental controls for a reasonable price — $3 a month. If you live near a BB&T, withdrawals at their branch ATMs are free. It also offers online bill payment and text alerts. In addition, there are a few other perks, such as:
- 24-hour roadside dispatch
- Travel and emergency assistance
- Purchase security for eligible items
- No overdraft fees (the card is unable to be overdrawn)
- Transfer between BB&T accounts, easily enroll in direct deposit and deposit funds quickly at any BB&T branch location
- Free online e-statements and one free monthly paper statement (subsequent paper statements are $3/mo.)
The card does have a $3 monthly maintenance fee, which may be a deterrent for some. However, if you’re a parent with a BB&T account, it may be very convenient to have your child’s card within the same network, able to accept quick and easy transfers. Plus, as mentioned, ATM withdrawals from BB&T machines are free, and ATM withdrawals from machines outside of their network are $2.50 (plus any fees incurred by the outside machine’s operator).
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 their limits, interest charges, or a negative impact on a teenager’s 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 a 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?