News Prepaid Credit Cards for Kids, Best Financial Idea?

Prepaid Credit Cards for Kids, Best Financial Idea?

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No, it is not good since it’ll start the credit dependency cycle for a kid. If the parent wants to teach kids about money, make them use cash to see how fast money disappears. Some might think that it will help kids become financially independent but anything to do with credit is always a bad idea. – California

The idea of handing my kids a credit card scares me. I would consider giving them a low-limit prepaid credit card for emergencies (foreign travel, college etc.), but only after knowing they could budget cash. ‘Plastic money’ does not seem real to my kids, but coins and paper money does. They do not see the paycheck, bank statements and bills that are behind a credit card, so it’s ‘magic money.’ And magic money is dangerous in my book. However, if they had a job, had a bank account, and had a need for a low-limit card, I would help them acquire one. I would not co-sign a credit card for my kids or anyone else and I would work to make sure they understand interest rates, and that a $15 pizza you do not have money for can cost you $60 with interest. – Madison, WI

The idea of a prepaid credit card was to prepare children or teenagers to become responsible for their own personal finances, however, I found that this is not the best way to teach them to become responsible adults. Once they have the credit card, prepaid or not, they are free to spend it on whatever they want without a mean for the parents to monitor their spending. It is no different than giving them a large amount of cash in hand. Instead, I’d require my children to provide me with a record of their spending along with any money. – Joplin, MO

The idea of when kids reach a certain age, they start exerting their independence. They want to go to the mail with their friends instead of Mom and Dad. Before you know it, they are starting to drive, and need money for gas and other teen necessities. Unfortunately, kids get more expensive as they get older, and somehow a parent’s pocket-change doesn’t always keep up with their needs. Will as a parent it is teach your children to use their credit card wisely. For example, tell them if they wouldn’t spend cash out of their pocket for something, then they shouldn’t use their card. Teach your children the to go over the statements with children to monitor spending habits and check for mistakes.You can explain to your child what they can and can’t use the card for. Tell you child to always take the sales receipt after making a purchases on their account. And if the card is lost or stolen, contact the card issuer immediately to cancel the card. – Tallahassee, Florida

Prepaid Credit Cards for Kids, Best Financial Idea?
General Contributor
Janice is a writer from Chicago, IL. She created the "simple living as told by me" newsletter with more than 12,000 subscribers about Living Better and is a founder of Seekyt.

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