Teens Have Plastic, Will Use

Your teenager is off to college – or perhaps, she just wants some financial independence now that she’s in junior high. And so comes the request – nay – demand: “Mom, I want a credit card.”

You heard right. She didn’t say, “Mom I want a cookie.” Are you freaking out yet?

Fear not. There are options available for parents these days that guard against youthful impulse-splurges that just come back to break your bank account.

Rebecca Lindsey notes in her article, “Teens & Credit: A Recipe for Disaster”, that:

There are many types of cards available to teens, many of which are offered on the web. PocketCard (site sponsor) touts their unique product as “the driver’s permit of credit cards.” Through a partnership with Visa, PocketCard offers a Sponsored Payment Card for teens. The card limits spending to the amount of money placed on the card by the parents or sponsors. Money can easily be added by sponsors with a phone call or a visit to the PocketCard website, and spenders (the teens) have instant access to funds. PocketCard can be used wherever Visa is accepted.

This summer, Visa introduced a new product geared toward teens that is called the Visa Buxx card. The Buxx card has sparked a great deal of discussion and debate about the merits of allowing teens access to electronic forms of payment. The card is basically a prepaid debit card, according to Michelle Singletary, a personal finance writer with the Washington Post. Visa has embarked on a marketing campaign to promote the Buxx card and bills the card as a “parent-controlled reloadable payment card”. The card is already being issued by many large banks and may come with an annual fee and transaction fees. Fees vary from bank to bank.

There are other cards available that fall under the “digital allowance” category; these cards allow teens to purchase items online without a credit card. By using a credit card to set up an account for their child, parents can limit the amount of money spent, where their teen can shop, and other interactions that are available.