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DEBIT CARDS
or PREPAID CARDS
trends
scholarships
THE BEST OPTIONS FOR YOUR TEEN
parent to parent
Cash is king, but if you have teenagers, it may
be time to teach them the tricks of the trade
when it comes to using plastic wisely. Most
employers prefer using direct deposit accounts, and once teens start driving, it’s easier
for them to pay at the pump than waiting in
line (and buying snacks for the road!). It’s
important that you take the time while they’re
still in your home to teach them what they
need to know about debit or credit card use.
Teens spending money
Teenagers are big spenders. They see something they want and have to have it. The
problem is, this makes it harder for them to
understand the difference between a need and
a want.
If they get everything they want when
they’re younger, they might think it’s a need
when they’re older. Or worse, they might not
think of the important expenses, such as bills,
as being any more important than getting a
brand new car.
Teaching your kids how to manage their
money is one of the best gifts
you can give them. It could
mean the difference
between living without
worrying about
of parents
money and living
don’t discuss
paycheck to paycheck
financial matters
with debt piling up
with their kids
before their eyes.
Living a financially
stable life isn’t just about trying to make a lot of money. Even people making six figures a year are in debt. It’s not the
amount of money we make, but our spending
habits that get us into trouble.
30%
Teach them to plan
If you don’t have the money to pay for it, don’t
buy it. When teens get their license, they’re going to want a car. Instead of just buying them
one, help them find ways to save for it. You can
even decide to match the amount they save,
giving them incentive to start saving and to
plan out their purchase.
For big expenses and monthly expenses,
teach your kids how to budget so that they can
12
avoid building credit card debt. If you don’t
have a budget yourself, make one so that you
set the example for your children.
Teach them to track expenses
With the Visa Buxx Card, teens can track
where they spend their money. It’s important
that they realize where all their money is going
so they can adjust their spending when planning for larger purchases. For example, if they
need to save an extra $20 per month to buy a
new computer, they might notice that they
spend that much on snacks per month when
it’s not really necessary.
from the expert:
I am very hesitant to suggest that
parents use prepaid or “reloadable”
cards as a financial education tool for
their teens. Many have fees associated
with them. Also, prepaid/reloadable
cards don’t offer many “money management” educational opportunities
since you simply put a certain amount
on them, and your teen spends until
the money runs out. The best way to
prepare teens for financial independence is to educate them and trust
them, while maintaining a presence
in their financial endeavors.
-Jessica Pigg, Guardian Credit UNION
WHICH
PLASTIC
IS BEST FOR
YOUR TEEN?
Pros & Cons
•Debit card•
• Uses money in checking
or savings account
• Easy to set up
• Most accounts are free
• Risk of overdrafting account
and incurring fees
• Does not build credit history
•Prepaid card•
• Spending limited
• Online monitoring
• Authorized adults can load
funds
• Employers can load wages
• Major branded cards
can be used many places
• Fees are charged for activation,
loading money, monthly
maintenance, etc.
• Does not build credit history
•Joint credit card•
• Builds credit history
• Parent and teen responsible
for debt
•Secured card•
• Credit limit set by savings
account balance.
Teen spending can be difficult to get a handle
on, but if you start teaching them early, they’ll
have fewer bad habits to break and more good
habits to continue to develop.
• Builds credit history
• May have high APR
By Samantha Asher
•Authorized user•
• Easy to set up
NOTE:
• Teen can piggyback on
parents’ credit history
• Parent solely responsible
for debt
• Parents’ credit score at risk
www.EzineArticles.com
Anyone below the age of 18
is required to set up their
checking account with a parent or guardian.
Along with prepaid debit cards, the account is
accessible to both you and your teen, allowing
you to keep an eye on spending.
www.potentialmagazine.com