Does Your Teenager Need a Credit Card?

One of the trends gaining in popularity is the idea of a prepaid credit card for teenagers. And, while teaching your kids about personal finance and financial planning is important, do you really need to do it with a credit card? It may not hurt, but it may not help, either.

Prepaid credit card options for teenagers

There are a few prepaid credit card options that are aimed at teaching teens to be financially responsible. Such options as Payjr Prepaid MasterCard, Allow MasterCard and Visa Buxx offer a combinations of allowance programs (signed off on by parents) and lessons on budgeting and financial planning. These options are interesting. After all, credit cards are a part of life now, and it is important for teens to learn about responsible financial choices. But be warned. These prepaid credit card options all come with hefty fees: setup, reload, over the limit, and even dormancy. Of course, you can give your teen a crash course in the joys of interest and fee payments on credit cards by having them pony up for these fees.

It is also important to note that some prepaid credit card options offer a version of "reward points." Teen credit card use results in points that can be used at specific online shopping centers. Even though you like the rewards program, this may not be best for teens. After all, it sends the message that they should spend, spend, spend. You need to make sure that the spending message is tempered by responsibility and with messages on the importance of saving and investing money.

Perhaps a debit card

Another way to teach teenagers about personal finance could be to offer a debit card. He or she can watch the money disappear out of the bank account and learn to be more careful. Additionally, there are fewer fees for a debit card. I had my first checking account at 12. And, while debit cards and the teen credit card were years in the future, I learned a lot about financial planning. I also learned about saving. Having your teen open a savings account is important, and should be done, whether you get a debit card or a prepaid credit card.

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