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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.

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Maiiin_Chick4u
Maiiin_Chick4u posted in Style:
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reply 21 minutes
Delancey
Delancey posted in Friends:
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reply about 3 hours
iluvme4ever
This is not something that I am at all proud of... I hate myself more everytime I look or even think about it... My wrist My Father My Depression My tears My scissors ......... That's all that I can think about...... All that's going through my head.... I've been dealing with depression ever since I can remember it's not at all something I am proud of....Espically since I get bullied and harassed a lot by classmates and others .......and ever since I've moved and changed schools my life has became my own hell...... And the only way I thought I could control my hell was to escape it...... Just for a while at least ......So I took the green scissors from the dresser and I took my right wrist and left.........I had disappeared.....My heart poured out as well as the blood from my wrist......And after I was finished....I asked for a bandaid ......and I cried harder knowing that no one cared......Oh I don't know where they are.......No why ifs or buts.........And they are the ones who say I was the crazy one as my eyes pleaded with them to understand how hurt I truly was behind those eyes ....The black eyes that disappeared to find help in her pain....... But they know now what I've done at least she knows .....he'll find out when he comes home .......heart broken he'll be .....he's tried several times to make me laugh smile be happy.......But I know he knew we both knew this wasn't working......When he asks to see the scars I'll show him....Knowing painfully Knowing I'm breaking the man who loves me the most...heart.....I guess I wait ...untill he shows ......there's nothing left to do but wait....... [s:sm3/1jw0]
reply about 6 hours
lion2a3
lion2a3 posted in Family Issues:
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awesomedude428
awesomedude428 posted in Friends:
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reply about 12 hours

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