Kiplinger's financial advisers discuss whether teens should have credit cards.
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Kevin McCormally: I am Kevin McCormally of Kiplinger's, and I am here with Janet Bodnar, Deputy Editor of Kiplinger's Personal Finance magazine to talk about prepaid debit cards. Janet, I understand there are card marketers who come up with a prepaid debit card for kids who are too young for credit cards. Janet Bodnar: That's the idea. The idea is it's a Visa branded card or a Mastercard branded card, parents are encouraged to put money on a card as allowance or in some other form and then the kids can use the cards to buy stuff or to get money out of ATMs, and to sweeten the deal for parents, parents can sometimes have control over the cards and see where the kids are spending the money. Kevin McCormally: Do you think they are good idea? Janet Bodnar: I don't think they are good idea. They are marketed as money management tools but they are really money spending tools for kids, great for retail, is not necessarily for kids because the money isn't real, it's something that they are going to click online and spend, it's not going to be real for them plus mom and dad can top up the cards are encouraged to top up the cards. Kevin McCormally: But, if the parents can control the spending in someway. Is that a good deal? Janet Bodnar: I don't think so, in the sense that if you're really worried about where your kids are spending money, maybe your kids just aren't mature enough for the card and they shouldn't have it in the first place. Kevin McCormally: So how do you think teen should learn to manage money? Janet Bodnar: I think they really need to start with cash. Even in this digital age, cash is the most real to them. They see when they spend money, that there is a big hole in their wallet, that there is a big empty in their pocket, and once they get the idea that they are spending real money, then they can move on to other things. Kevin McCormally: Well, do these debit cards make sense for anybody? Janet Bodnar: They could make sense. If your kid is already a good money manager and you want a new intermediate step, the next step or if the child has a lot of income say from babysitting or lawn mowing where he or she is spending his own money, could also work. But even in those cases, I would rather have the child open a real bank account either a savings account or a check-in account when they get to be teenagers, spend their money, not yours and also it would be less in the way of fees, because these prepaid debit cards can be very expensive come with a lot of fees attached. Kevin McCormally: Thank you Janet.

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