Kw-logo-smaller

Targeting Teens with Plastic: The Dos and Don’ts of Prepaid Cards

There’s a point in everyone’s life where keeping money in a piggy bank, desk drawer or shoebox just doesn’t make sense. As a teen, choosing where to store your cash can be tough. While opening a bank account seems obvious, you may find yourself drifting toward a prepaid card.

Understanding Prepaid Cards

Prepaid cards MAY seem like a smart choice. After all, they can be used anywhere, are safer than cash and you can only spend the amount loaded on the card. Prepaid cards also let you track your spending like a normal bank account. Plus, these cards come in cool colors with celebrity endorsements – even Kim Kardashian wanted you to use her Kardashian Kard for a while (unfortunately, with unbelievably high fees, this card is no longer available)! But be warned: no matter what Kim or the gang from Twilight tells you, these cards can actually be more of a trap than a tool when it comes to your cash.

Making the Right Choice

First thing’s first: don't ever make a decision on who to trust with your money based on stuff like celebrity endorsement, color or “cool factor.” Many prepaid cards have fees as high as $100 a year – that’s WAY more than a normal chequing or savings account offered by your bank!

So why would you EVER consider a prepaid card? Well, some people say that prepaid cards let you work with your parents to develop good spending habits. This can be a really good thing, but it really doesn’t make up for the fact that the fees they carry are way too high. If you want a prepaid card, expect to pay:

  • A setup fee of between $6 and $15
  • A loading fee
  • A monthly fee (that’s EVERY month)

All together, depending on how much you use the card, you could average $70 or more in yearly fees – and that’s not including standard fees like ATM use or transfers.

Better Alternatives

One alternative to a prepaid card is to open a bank account. If you work with your parents and someone at your bank to choose the right bank account for your spending/saving habits, you could avoid paying such high fees. However, if you don’t use your account properly, you may actually end up paying more in fees than you would with a prepaid card.

The other option is a credit card, which can help you improve your credit score (this will help you do things like borrow money for a house or car when you grow up. HOWEVER, credit cards have been known to get a lot of people in a lot of trouble, because they basically allow you to spend money that you don’t have/isn’t yours, and then charge you really high fees called interest when you don’t pay back that money on time. You should NEVER get a credit card without talking to your parents and bank about it first. Besides, most credit card companies require you to be a certain age before you can sign up for one.

Bottom Line

No matter what direction you go (prepaid or traditional checking), don't let celebrities or your favorite role models play a part in your personal financial decisions. There are a lot of ways to learn about money; paying unnecessary fees is not one of them.

HAVE YOUR SAY: How do YOU save your money? Let us know by leaving your comment below!

About the Author

Alex Matjanec is the co-founder of www.mybanktracker.com: an easy-to-use web portal that lets consumers rate and review banks, compare interest rates and learn more about the savings and investment options to best meet their goals.

Related Stories
17 Comments

latest videos

F1067448135562

What Do You Save Your Allowance For?

  • A big day out with your pals.
  • Video games and computer stuff.
  • Clothes, clothes and more clothes.
  • CDs or posters of my fave musicians.

related stories

Micro_a micro
Athletes make millions of dollars these days. Unfortunately, most of them have no financial skill...
Micro_a m
Question by Juan: Hey all! I’m fanatic of basketball. I’m really upset because I have to pay $75 ...
Micro_allowance-micro
Kidzworld has everything you need to know about allowance: how to save it, spend it and ask for m...

Dear Dish-It in the forums

lolflowergirl
lolflowergirl posted in Friends:
i feel alone too
reply about 1 hour
kayme123
kayme123 posted in Friends:
i know the feeling. but i got taken off a website instead of my friends. i can assure you they probably feel the same and are missing you, BUT its not worth dwelling over it. friends come and go without any choice in life and trust me, i lost the love of my life and my two of the best friends in the world. The thing is, you have to move on, because they wouldent want you feeling sad over them right? they'd want you to be the happy person you were when you were with them! for starters, i'll be your friend so your not scared to make some new ones. To be honest, i went through the exact same thing as you did and it DOES hurt very bad. But once you find some people that are willing to make you feel better, you know you've chosen the right friends again
reply about 10 hours
Irene_love
Irene_love posted in Style:
"1.am.3m0" wrote:Hey. Im also turning 15 soon. So dont worry you arent alone hahah. Start dressing for your shape and also find whats comfortable.  Because if you wear something that is uncomfortable you wont be happy and happiness is the best look :) Most of the time I wear jeans with a graphic tshirt or singlet and a cardigan or light jacket. Hoodies are great for winter. And I wear combat boots like doc martins and converse. Hope I helped somehow! :)
reply about 11 hours
lion2a3
lion2a3 posted in Friends:
Um well I just lost two friends on another website because they weren't supposed to be on there so now I'm really depressed and scared to have friends again........ and school about to start soon so I wanna make sure that I'm happy then some I can make friends cause it's really hard for me to make friends because I can get really shy and stuff so someone help.......
reply about 12 hours
_Black♥and♥White_
Maybe... But if I did have one and I had a choice I wouldn't mind to have a younger brother or Older one... SUCKS TO BE THE ONLY CHILD
reply about 23 hours

play online games