Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Prepaid debit cards are popular with some parents because such cards provide the experience of paying with plastic without actually borrowing money and without the chance of overdrafting. Prepaid debit cards are touted as valuable aids in teaching teenagers about money management. However, the recent…
Prepaid debit cards are popular with some parents because such cards provide the experience of paying with plastic without actually borrowing money and without the chance of overdrafting. Prepaid debit cards are touted as valuable aids in teaching teenagers about money management. However, the recent furor over some celebrity-endorsed prepaid debit cards has many re-examining their role.
Advantages of prepaid debit cards
Prepaid debit cards do come equipped with some advantages. Parents can easily load a teen’s allowance onto the debit card. Most prepaid debit cards also include a direct deposit option, so a paycheck from a part-time job can be deposited to the card. Some prepaid debit cards even encourage savings.
Prepaid debit cards are easy to use because they are emblazoned with credit card company logos, and they are therefore accepted everywhere credit cards are. Teenagers can learn how to manage small amounts of money before they start handling larger amounts. Encourage your teens to track their spending so that they know how much is left on the card and so that they can develop good habits early on.
Disadvantages of prepaid debit cards
The biggest downside to prepaid debit card usage is all of the fees. Some cards charge more fees than others, but some common fees charged include:
In some cases, card users may pay anywhere between $30 and $100 a year on fees—just to access their own money. You need to think about what kind of financial lesson you are teaching your child if you use a fee-ridden prepaid debit card as a money management tool.
Learning money management lessons
There are a few prepaid debit cards with much lower fees, and some prepaid debit cards have no fees at all. Teach your child a valuable lesson by having him or her help you comparison shop to look for the best deal. You will save money in fees and your teenager will participate in an important financial exercise.
You may want to start your search at your local bank or credit union. It might have a prepaid debit card geared toward teenage customers, or you can help your child open a checking account and a savings account instead. Depending on state law and the bank in question, you can probably open a joint account with your teenager. In some cases, your teenager might even be able to get a debit card in his or her name (more likely if your child is at least 16).
If you are concerned about overdrafts, you now have the ability to opt out of standard overdraft services. If you do opt out, your teen will be unable to withdraw money from an ATM or complete a purchase, if there isn’t enough money in the shared account to cover the transaction. You can limit some of the ability to overspend while still providing your teen with the means to become used to using plastic as a payment method.
Keep tabs on your teen’s spending. Encourage him or her to track expenses, and regularly review the account statements. Set ground rules and enforce them. In the end, using a joint bank account to teach these lessons—especially since you have access to the account and can monitor it at all times—may be more effective in teaching real world money lessons than a prepaid debit card.
Miranda Marquit is a freelance writer and professional blogger specializing in personal finance, family finance and business topics. She writes for several online and offline publications. Miranda is the co-author of Community 101: How to Grow an Online Community, and the writer behind PlantingMoneySeeds.com.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.