Prepaid Cards for Teens

As the old saying goes, practice makes perfect. Since teens don't get properly educated in school regarding personal finance, it's up to parents to teach their teenagers how to practice responsible credit management.

For many parents, getting a prepaid card for their teen is a great way to 'practice' using a card for purchases. Prepaid debit cards work by loading money on the card and then every purchase made is subtracted from the balance. Since prepaid cards are not credit cards, there is no chance of racking up a bunch of debt.

Prepaid Cards for Teens and Parents

Some prepaid cards, such as the Discover Current card, offer parental controls that allow them to restrict purchases in select categories such as bars, tobacco stores, and hotels. Teens will enjoy the ability to track their purchases online and get balance and spending alerts via text message. Parents can also set daily, weekly, and monthly spending limits with this card.

Do Prepaid Cards Build Credit?

Generally prepaid cards do not help build credit, however some companies offer a credit builder service that reports Bill Payments to a credit reporting agency. The service is generally free when the card is loaded via direct deposit.

What are the Fees Associated with Prepaid Cards?

There are several fees charged by prepaid card issuers. The most common are monthly fees and/or activation fees. Additional charges may be accrued for making ATM withdrawals or PIN purchase transactions. Since each card is different, be sure to review the terms and conditions for a list of fees.

Prepaid cards for teens are a great alternative to credit cards. Compare and apply for prepaid cards here.