Modern Day Allowance on Prepaid Credit Cards?

For most parents, the thought of having a credit card as a pre-teen or teenager was unheard of for their generation but more and more parents are finding out that it’s a reality for kids growing up today. There are several reasons that prepaid credit or debit cards are now becoming commonplace for kids in today’s society. One of the largest reasons that credit cards for teenager and kids are becoming so common is that a lot of parents realize that credit cards are going to play a huge role in their children’s lives and will most likely be the sole form of payment that they use in the future.

And looking into the future it’s not just credit cards that will be used, if Google has their way people will begin making the move to their “Google Wallet” platform and when that happens all you’ll need to do to make a purchase is wave your cell phone over a credit card reader and that will be it. With all of these advances in technology it’s becoming even more important to kids and teenagers to become familiar with electronic purchases.

Credit Cards For Beginners

As we discuss providing credit cards for kids or teenagers it’s important to point out that it’s still important to teach children about money the old fashioned way by earning and spending real money. By teaching kids with real dollars and coins as opposed to putting them straight onto credit cards, kids will understand that when there are no more dollars or coins in their wallet, they are out of money.

Once your children or teenagers have a good understanding of money, how to count it, what it takes to earn it, and how to be responsible with it you can ease them into learning about how credit cards work with a prepaid credit or debit card. The reason we don’t recommend going straight to a prepaid debit or credit card for educational purposes is the fact that when you do that, the money isn’t real to them and they have no understanding of the consequences of poor money management. Believe it or not, most people when they move out of the house and on their own have no understanding of how credit cards work and before they fully gain an understanding they can find themselves in hundreds if not thousands of dollars in credit card debt.

In addition to teaching kids about money, there are several other reasons where a prepaid debit card or prepaid credit card comes in handy for kids. The fact of the matter is kids today want different things, where kids used to be happy with a few bucks so that they could go down to the store and get a back of baseball cards, today they’d rather have a few dollars loaded on an iTunes card so that they can download their favorite music, games, or television show within seconds. Some of the most common reasons kids like to use credit cards today are:

Online Purchases- With parents working more and more kids have found a way to become more self-reliant, one way that they’ve done that is by not sitting around and waiting for mom or dad to have time to take them to the store they need to go to down town but by finding what they need online. More than any other generations before, kids today have an ever increasing comfort level and knowledge of how to order the products they want online. To make these purchases possible parents can either trust their children with their personal credit cards or set up a prepaid credit card for them.

iTunes- iTunes has become an all in one media marketplace for over 500 Million users and whether it’s music, movies, TV shows, games, or the “in app purchases” that you hear so much about in the news iTunes is the source. Kids know what apps their friends are playing and what music is popular and they like to be able to download it instantly, all of that is possible with a prepaid debit or credit card.

eBay Items- If people can’t find something on a typical ecommerce website or are looking for a deal or something off the wall, eBay is the next logical step after. Most teenagers today have found something they want on eBay and some have already made thriving businesses on eBay so it’s no wonder that teenagers may need access to a prepaid debit or credit card for these purchases. In addition to prepaid debit or credit cards another common form of payment on eBay is through a payment transfer company called PayPal. As we mentioned earlier in the article it’s important that kids understand how all forms of electronic payment work so that they can be as disciplined as possible with it and by training kids with a prepaid debit card, they will gain an understanding of how to become more disciplined with their PayPal purchases as well.

Gaming Mods- Going in line with some of the off the wall purchases that kids have grown accustomed to, “gaming mods” are upgrades or additional levels that kids can purchase within modern day video games. Again, to be able to purchase these mods kids will need a credit card so the safest way to limit these purchases is with the use of a prepaid debit or credit card.

The fact that kids are becoming more comfortable with these online purchases is a great sign for the technology available today but as we mentioned before, without a solid understanding and appreciation of what it takes to earn and effectively manage real money, these electronic purchases can get out of hand quickly.

Another thing to take into consideration is that a lot of time with these “Gaming Mod” or “In App Purchases” where real money can be spent to buy virtual items or money in the games can cause the lines to get blurred between real money and virtual money which can lead to overspending. As long as kids have been taught to be disciplined with their finances they’ll be more likely to approach even virtual purchases in a disciplined manner.

If you’re interested in setting your kids or teenagers up with a prepaid credit card visit your local Check City location and talk to one of our helpful tellers to see which option is best for your needs.

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