As children grow up, we expect them to take on more and more responsibilities before they become adults. For example, teenagers are often asked to purchase meals and pay their own way when going out with others.
Although children cannot open their own credit card accounts until they are 18 (or can prove they have income), there are a variety of prepaid debit card products available to adults that allow children to have their own subaccounts. Although the cards don’t influence credit scores and are not listed on credit reports, the cards can get kids accustomed to spending within a budget when using plastic.
How This Works
Parents open up a prepaid debit card account in their own name, and then create subaccounts for their children. (Unfamiliar with prepaid debit cards? Here’s a quick guide to how they work.) Children receive their own cards, which parents can fund, monitor and use to set spending limits. Funds can be added to prepaid debit through direct deposit, by purchasing reload packs, or by adding cash at participating retailers.
In addition to monitoring their children’s spending habits, parents should also be careful to find a card that offers the most features for the fewest fees. Many cards charge a monthly fee and a fee to access cash at an ATM. In addition, some cards also have a cash reload fee. Here are some of the best options for kids.
1. Serve From American Express
Serve cards can be ordered online for free, or purchased at many retailers including Walmart, Walgreens and Office Depot. Funds can be added by direct deposit, linked to a bank account, or by writing a check and depositing it with a mobile phone app. Cash can also be loaded for free at more than 19,500 CVS, Walmart and 7‑Eleven locations.
Cards can be used at retailers that accept American Express and at ATMs. Parents who create subaccounts — there is a limit of four — can transfer money to these subaccounts and control ATM access. The card also features free online bill payment to any person or business. Unlike many of its competitors, Serve has a free ATM network with 24,000 ATMs. There is $1 monthly fee for this card that is waived if cardholders use direct deposit or add $500 or more during their monthly statement period. (The fee is not charged in New York, Texas or Vermont.)
2. Visa Buxx
This card is available online and at some major banks such as US Bank, and it is designed specifically for teens to use. Parents load funds onto the card online or over the phone. Parents determine how much money is loaded on the card so they can control their child’s spending (note: there are no subaccounts, and parents cannot control ATM access). Cardholders can also pay some bills online, like those to mobile phone providers. There is no monthly fee for this card, but there is an ATM withdrawal fee of $1.50, plus whatever charges are imposed by the ATM owner. Other fees vary depending on the institution that issues the card.
3. Bill My Parents
For the Bill My Parents card, the name pretty much says it all. Parents fund the MasterCard-branded card using their credit cards, debit cards or bank accounts by phone or online. Family and friends can also load money onto the card for birthdays or special occasions. Parents can track spending and set limits either online or through a mobile app. In addition, the card can be set to alert parents via text message, and the card can even be locked and unlocked via text. In fact, parents can block the cards from being used at places where they don’t want their children to go. (However, parents have no control over cash-back from purchases.) There is a $3.95 monthly charge for this card and a $1.50 ATM fee, plus any fees levied by the ATM owner. there is no charge to add a recurring allowance, but a 75-cent charge to load funds from a checking or savings account, and a $2.95 charge to load up to a $100 from a credit or debit card.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
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