In his article
Credit
Cards for Teens George Tull discusses the
idea of teaching your teenager how to
behave responsibly when using a credit card. He
suggests either giving your teen a card linked to your own,
not necessarily always a good idea, getting a secured credit card
thereby limiting the moment they can spend, or giving them a
pre-paid credit card.
If you live in the UK, there are few secured credit cards
available, mainly designed for those with bad credit, however
prepaid cards are widely in use. They may be called a pre-paid
credit cards, prepaid debit cards, or travel cards.
Advantages of Pre-paid Credit Cards
Prepaid cards can be used just like a credit card to
purchase goods and most allow you to draw money from an ATM machine.
There is no danger of getting into debt. The cards are
preloaded with cash, either by you or your teen. When the limit has
been reached the card can no longer be used.
If the card is stolen, the only money that can be lost is any
amount that has been credited to it. The cards can normally be stopped
if they are stolen.No thief can run up an
enormous bill at your expense.
Pre-paid cards are particularly useful if your teen is at
university or travelling abroad. You can top up their card to
ensure they do not run out of money when they are in a vulnerable
situation.
Disadvantages of Pre-paid Credit Cards.
There is normally an application fee.
Some cards charge a monthly fee and you will
need to shop around to find which card offers the best value
for money. Although you may have to pay a monthly fee,
this is likely to cost a lot less than the monthly interest charges
that a teenager could run up on an ordinary credit card! Most companies will
charge for withdrawing cash. To get the best value
you will have to decide
how the card will be used before making a selection. If your teen
is going to travel then a travel card may be useful, but do check
on how these can be topped up if necessary.
More and more pre-paid cards are becoming available and as they
try to compete with each other the deals offered become more
competitive. It is almost impossible to say which card is the best
for any length of time. Do ensure that it is accepted at ATM machines.
Disclaimer
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