Prepaid
credit cards for teens and preloaded credit cards are increasingly popular for
or all ages. There is no risk of credit card debt with these cards because
prepaid cardholders can only access the funds preloaded to the card. Fair play
to the card people for giving us the chance to avoid overspending!
There are
different types of prepaid card, ranging from ePurses, to gift cards, to travel
cards. They include a wide range of payment products, such as gift cards,
payroll cards, teen cards, and travel cards. Despite significant product
innovations, it is unclear whether and how existing federal and state laws that
apply to other financial products (e.g., checks, credit cards, deposit
accounts) apply to the different varieties of prepaid cards. Although the legal
system may be slow to pick up on the prepaid trend, don't let if put you off
using one.
These cards
are particularly useful for parents with young families. Your youngsters are
probably used to seeing you pull out your card to pay, but have they ever
looked at the statement's bottom line or watched you write a check to pay the
bill? Concepts like paying with plastic can be abstract without a reality
check. Most of all, kids want to enjoy the card and the freedom it provides -
it is natural that the problems of payment may not come to their mind when they
start using a card. These cards are great because if you do overspend and there
is no cash in the card to draw on, the effect is that you cannot just go and
get any more money out, with one of these prepaid cards. This soon teaches them
a stern and rapidly assimilated lesson.
One way to
impress on them how easy it is to overspend and to get into financial trouble
is to explain the following true fact to them: Let kids know that people who
use credit cards spend more compared with those who use cash or checks.
The extra
they spend is substantial as well. One study found that customers at fast-food
restaurants spend 50% more when they pay with plastic rather than cash, says
Baylor University Marketing Professor James A. T.
When I got
my first credit card I was 19. I was financially clueless, and when I got my
first card I had left home so my parents were unable to keep an eye on me, or
guide me through the youthful danger period with my early cashless purchases. I
do wish I has started with a prepaid card.
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