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Are teen prepaid cards the way to go?

17 March 2009 by CreditCardsCo™

With the world economy starting to slow in terms of growth, everyone including U.S consumers are beginning to feel the impact of tightened access to credit facilities. As a parent, the last thing you need right now is a teen running down your credit debt.

Prepaid cards have gained popularity within the last decade. Prepaid cards are generally seen as the ideal tool for parents who'd like a child to learn what financial independence is all about. These cards are also good for budget conscious persons and those who have restricted access to credit.

Prepaid cards are often confused for debit cards but unlike debit cards, a prepaid is not attached to a bank account. They usually come on the VISA or MasterCard logo and can be used anywhere cards on either network are accepted.

Parents who give their children daily/weekly/monthly allowances would consider a teen prepaid card for one of the following reasons:

  • 1. Accessibility
  • 2. Increased Convenience
  • 3. Budgeting
  • 4. Tool for Learning Financial Independence


Securing a teen prepaid card usually requires nothing more than valid government identification (usually a social security number). Most card issuers are not concerned about credit history, and ratings. With some issuers, a teen is allowed to order a prepaid card with little or no approval from the parent.

Increased Convenience

A single parent working long hours is unlikely to remember to cash out allowance money from an ATM. What happens in another situation where a teen schooling in another state is in need of urgent funds? With a teen prepaid card, parents have loads of options through which to deposit funds into their teens' prepaid card. This usually includes but is not limited to Pay Pal, Credit card, Debit card, Money Bookers, and cash deposit at accredited centers.


The best teen prepaid cards will let a supervisory figure configure how much funds can be spent within a specified period (preferably on a monthly basis). Many of these prepaid cards allow two accounts (one to be used by the parent while the other for the child). Setting monthly limits lets the parent channel more funds into the prepaid card with an assurance that funds are spent only as allowed by a pre-set spending limit.

Tool for Learning Financial Independence

In today's world, credit cards are one vital way through which numerous individuals have hit the rocks. Credit limits higher than necessary often mean that our wants take over our needs. Couple this with high interest rates and accumulating credit debt and you'll get the whole picture of how dangerous a credit card could be to a successful financial life.

For teens building good credit should be paramount and this can only be achieved with wise decision making over a period of time. Teen prepaid cards let parents teach their wards how to create a budget and stay within it.

Knowledge about plastic cards is better learnt by experience and with a prepaid card, there's little risk of your teen making a hefty purchase without your knowledge.

How to use teen prepaid cards to your advantage?

Before getting a prepaid card, the first thing you probably need to know is how it could improve your current techniques of disbursing cash to your teen. A prepaid card comes with its benefits as no interest, expense monitoring, and added convenience but at the same time, your teen is exposed to other challenges often unavailable with cash spending.

Online purchases

Teens equipped with a prepaid card are exposed to all different kinds of purchasing, from merchandise, to pornography and online gambling. Online purchasing gives you (as a parent) yet another reason to pre-set spending limits on your child's prepaid card. You can't always be there to monitor where your child makes purchases, but at least a pre-spending limit will ensure all the money doesn't go down the drain in one swoop.

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