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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.

Prepaid Debit CardsKim Kardashian's 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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Dear Dish-It In The Forums

AnnaOfExquizurd
1: A. It'd be rude to neglect her; I'm also a nerd, though, so no big deal at all. 2: A. I'm shy anyways, and most of the popular gals at my school are repulsive with how narcissistic they are o.o 3: Uh, my friends wouldn't bully a random second grader girl, but if they were, I'd tell them to stop. She's just a second grader, and she doesn't need to have real low self-esteem already, or ever! I do notice younger children tend to be way more sensitive than older ones, so I'd make sure she's okay afterwards. That'd be so sad if a second grader really was being bullied tho ;-;
reply about 14 hours
-Oracle-
-Oracle- posted in Friends:
"SmartSunnyShadow" wrote:Okay, thanks but will anyone else help me???  If they're as good friends as you're making them out to be then I'm sure they'll forgive and forget. Try not to over think the situation.
reply about 16 hours
AnnaOfExquizurd
In the part where you said they started bullying you... what were some of the things they specifically said? If they were just calling you insensitive or racist, tell them it was an accident. You can apologize about the racist comment. If you show you really are sad about it, they'll know you mean it. I hope everything goes well and gets better ^-^
reply about 16 hours
SmartSunnyShadow
Okay, thanks but will anyone else help me??? 
reply about 16 hours
Powerful_Minded_Girl
Oh that sounds terrible! Everyone will have this moment once in their life. Ask some others for advice! 
reply about 16 hours