okay, I'd like to hear your opinions on this topic.

Banks have come up with a debitcard for teens that parents can add $ to like an allowance.

Do you think it's a good idea? If so, why? If you don't think it's a good idea, why not?

I would need more info before making a blanket statement, however, if there are NO LIMITS set, or controls, then I think it would be a bad thing...

From the sound of it, it's simply a holding place for money. Instead of bugging the parents for money, they just use the card. I'm thinking there's more to it than this???? Could you give details?

JJ

Vicki, I think it beats the credit card idea. At least if the money isn't there, they can't spend it. It may be a responsible way to teach kids there has to be something behind the plastic...like money in the bank.

My son is in his second year of college. This week he got 2 applications for credit cards sent to our home. IF I didn't have better things to do with my time I could count the number of applications he gets each month. they roll in. These applications come with blank checks too. I think this is ludicrous. For gosh sakes, how much money could a college kid have? He only works in the summer.

Some kids are going to graduate college with major debts because the banks are stupid enough to give them credit cards when they don't have a cent.

Tell us more about the debit cards. I haven't heard about this yet.

I think they are a good idea. You put the amount you want on the card and you can replenish it any time you desire. (At least that is how Visa Buxx works) And you get to check out where the money is spent! You can check to see the balance and everything.
I didn't use the card for a teen. I used it for my brother who was taking care of my mom the last four months before she died. I took care of the finances, but since he lived in another state he needed money for buying groceries, gas, sundries. I handled all the bills, etc., and the card made it easy to send him the money he needed. It worked out pretty well.
I think the cards are excellent and since you can monitor the expenditures, you can discuss with your child wise spending and unwise spending.

My point of view on the debit card is that it is much safer than a credit card. You can get into deep trouble fast with a high limit credit card, interest which is added daily to the balalce at 22% is SCARY!!! Now this debit card if I am correct is like money in the bank, once its gone you get turned down, right, so theres no way to get overextended or overdrawn. Not a bad idea as long as the parents bank account isn't used as colleteral against overdrafts. If thats the case run fast and run far BAD, VERY BAD idea.

Egads, that could be written in the fine print that we boomers can no longer read. That would be awful!

Well, I see one good advantage of a debit card for teens is the parents put in a set amount and that's it, until they add more $. Once it's gone, it's gone and the card won't work.

Another good reason to use it is the kid can't "lose" the money. If the card is lost it can be reported, and the $ is still there.

I think it might be a good tool to help teach a teenager about finances. Especially if the parent reviews the statement w/the teenager each month. They can review past purchases and ask if they were really necessary, etc.

I would definitely have it set so cash couldn't be accessed from an ATM. Otherwise, the kid would probably just take out the cash and be done w/the card.

Anyone else have any ideas about why it's a good idea or not?

I think it's a good idea, with set rules, because everything is going electronic and kids need to know how to use the technology.

1. Must be a set limit. No overdraft permission.
2. No ATM Cash Withdrawals
3. It can help to learn budgeting.

I would fear it being used to purchase drugs and alcohol. A dealer could take credit/debit cards and use an innocuous name - these people are ingenious in their schemes.

Some stores that take debit cards don't print detailed receipts, so a purchase could just say food or something, disguising the real purchase.

For the past four years my husband and I have been using a prepaid spending card to load money onto for our oldest daughter.

I would recommend anyone considering doing this to shop around and make sure that the card is really free - no charges for inactivity, no charges for use. We use USAA (www.usaa.com) for ours.

Some of the negatives to these prepaid cards is that there IS a way to "overdraw" the account.

We experienced this with our daughter when she would use her card at the gas pump to "pay at the pump", the bank would reserve $1 instead automatically deducting the $20+ gas bill.

This created a problem with our daugther's account being overdrawn because she would "check" the balance by phone and think she had more money to spend than what she really had. This continued until will insisted one key thing:

1. That she is accountable for what happens on the card.

If she overdraws the card for ANY reason then her card gets frozen for a month and although we continue to put the allowance on the card, no interest* incurs on her card, and she cannot spend any of her money until one month from the time she "overdrew" the account. We encourage her to keep a written ledger of her transactions and keep a running balance.

*We add 10% interest based on the ending balance on the last day of the month. i.e. if she had $5.67 at the end of the month she would get an additional $ .57 added onto our next deposit. If she saved more than she spent, on average we would be putting $5 - $10 EXTRA each month as "interest".

We hope by holding her accountable with consequences of overspending that this will continue to teach her to keep track of her spending so that in the future she is not getting NSF fees, etc. on checking accounts and other accounts when she is refining her gift of shopping.

A really great thing about this card is that we can hold her accountable for her purchases because we can view the statements of her transactions online. Without divulging too much, a couple years ago our daughter spent money on a service she shouldn't have and without us having this card, we would not have discovered it in a timely matter to hold her accountable for something that could have affected her future. Of course she was upset at the time of intervention, but since she is a few years beyond has acknowledged our wisdom in stepping in and has thanked us.

She is heading to college in the fall, and the prepaid spending card can go with her and we can load this for emergencies, her monthly allowance etc.

Most banks offer this card for use "indefinitely" if the account is opened prior to the child turning 21.

We anticipate we'll keep hers open until her 25th birthday, graduation from grad school or when she gets married - which ever comes first.

Hope this helps...

Wendy Stewart-Hamilton
DallasGal for Dallas, TX

Vicky - earlier you wrote "I would definitely have it set so cash couldn't be accessed from an ATM. Otherwise, the kid would probably just take out the cash and be done w/the card."

On our prepaid card for our daughter (USAA.com)
We can sent the max daily ATM amount and transactions per day. So you can set it for $20 or nothing or $200.

~Wendy
aka DallasGal