Prepaid credit cards for teens do not have interest charges or monthly payments, but be aware that they are not normally free and there are fees levied by the service provider. These cards are perfect to help your teenager learn money management skills that they will benefit from for the rest of their lives, which means that they are not only almost a necessity these days when so many outlets expect payment by plastic card. Prepaid credit cards for teens allow parents to curb their teen’s expenditure, as the cash has to be put up upfront. While advance payment credit cards are not free, they can be an affordable alternative to borrowing their parent’s credit card.
Credit card debt can so often become a vicious tightening noose, and many young adults have been forced to file for bankruptcy because they have overused their cards. We would even go so far as to suggest that this type of card is possibly the best way to teach your children about credit card use and the avoidance of debt. This in itself would be a good reason for the use of these payment cards.
Credit Card Requirements
Credit checks are not required for prepaid credit cards.
There are often credit card offers available for teenagers and some of the most popular are for prepaid cards that have the Visa logo and can be used exactly the same way as a regular credit card. But, of course the difference is that your teen can become a credit card processing agent ‘t spend more than the prepaid amount funded on the card.
Cards that are accepted like credit cards, but function as debit cards, with each purchase coming from the prepaid amount loaded onto the card are so useful for teenagers in high school, when otherwise having a credit card generally means asking Mom or Dad if they can borrow one. If a parent’s card is lost or stolen there is no danger of money being spent by the thief beyond the prepaid amount either, which means that both parent and offspring can relax about any money loss from credit card theft or other abuse.
As with any credit card, pay the entire monthly budget balance every month, and keep the card as a convenience for your child (speak to your bank to confirm this). Just predict the amount that will be needed and set up a monthly or weekly (say) transfer that automatically transfers the agreed amount into the student or child’s card.
You won’t receive the same protection against unauthorized purchases as you would with a credit card, but most of us will consider this unnecessary, as the loss is very much limited to the balance in the account at that time.
If you Fail to teach your children the pitfalls of credit card debt it can lead to serious financial problems in their future. According to Metro-Bankruptcy Credit Card Info the major cause of divorce and bankruptcy stems from too much credit card debt.
Learning how to handle money as a teenager may just keep them from becoming a slave to credit card companies. The proverb says that “the borrower is the slave to the lender”. But this quotation is strictly limited for the prepaid cards to the amount which is sitting in the card account balance at any time.
Once you have decided how much credit you want you child to use and then decide how much you want to pay each month, experts can do the research for you, however, it is much better if you make the comparisons and present the options necessary for sound financial decisions regarding the use of credit.
Because there is no line of credit attached to the prepaid card the user can’t go over the prepaid limit. For Parents there are no risks when offering their teens their very own visa prepaid credit card as the money is already preloaded into the visa prepaid card. The ‘upside’ is that until recently Upside Visa stood out amongst all other credit cards for teens because there are no activation fees nor are there any monthly or annual fees involved with the card offer. (This offer may no longer be current when you read this – so always check this information with the supplier first before making any decisions.)