Intro: Finding the Best Prepaid Debit Cards for Teens: Loosening the Financial Leash
The usual trials and tribulations parents face with their hormonal, turbulent future adults—also known as teenagers—include growing demands for financial independence. Perhaps even a teen debit card.
Those requests are often justifiably shot down with a swift “No!” Then the parent rushes off to find out which debit cards for teens make the most sense. Because despite all the pitfalls, banking for teens offers a gentle introduction to adult life.
But what are prepaid debit cards for teens?
Debit cards for teens offer many downsides; a cash allowance sometimes seems to make more sense. But young adults don’t need pocket money to buy movie tickets and a bucket of popcorn. Some have jobs, others need to dip their toes into the waters of financial independence offered by debit cards for teens.
But which prepaid debit cards for teens are available? And which teen debit card would be best for your situation?
Whether you’re the doting parent nervously searching for prepaid cards for teens or a teenager looking to prove to your mom and dad that there are good options out there, we’ve got you covered.
We’ve combed through all the available debit cards for teens and sorted through what makes the most sense for whom. The list of available prepaid cards for teens is long, and some might better fit your need for a teen debit card than others.
Preparing for Prepaid Cards for Teens
Before choosing, it’s important that parents and children have a long talk about the pros and cons of prepaid debit cards for teens. For both, a debit card for teens represents a switch into foreign, and maybe even scary, territory.
It’s important to have a free and open talk about what’s expected and how to deal with the newfound freedom of a teen debit card.
Prepaid debit cards for teens act essentially like refillable gift cards. Bought either in a store or online, parents have direct access to the teen prepaid card’s account information, balance, and activity.
The use of prepaid debit cards for teens has reportedly grown immensely, according to the United States Consumer Finance Protection Bureau, jumping from 1.3 billion transactions in 2009 to 3.3 billion four years later. The same report said prepaid cards in general accounted for more than $100 million in transactions, up from just under $20 billion eight years ago.
Parents or guardians can fill debit cards for teens either online or by phone. Some offer banking for teens options, which allow the cardholder to top up their funds via direct deposit from a summer job or checks from relatives.
Many of these prepaid cards for teens can be found online, via phone, or at brick-and-mortar branches of your bank.
Make sure all involved understand both the benefits and limits of a debit card for teens. They’re often similar to a checking or savings account, but with a de facto spending limit set by contributions to the prepaid card for teens.
Naturally, the biggest catch with prepaid debit cards for teens are fees. Monthly, withdrawals, transactions… Debit cards for teens may charge fees for all of them and more!
This, of course, means diving into the fine print of any prepaid debit card for teens. Parents and children should do this together, so they can see which fee structure will match the teen’s spending plans. This will also help the parent decide how much money to contribute to the teen debit card.
Don’t forget to check the legal requirements as well as company policies to sign up for prepaid credit cards for teens; some companies prevent minors from opening an account under their own name. Read the contractual terms and all fine print before moving forward.
What You Need from a Debit Card for Teens
The best prepaid cards for teens offer some or all of the following features:
- Some version of financial independence for the teen, allowing him or her to make solo spending decisions
- Oversight for the parents or guardians financing the debit card for teens
- Spending limits and controls, which allow parents to put a cap on any teens abusing their prepaid credit cards for teens
- It might be a debit card for teens, but it still has adult-like security measures, which will prevent identity theft and fraudulent purchases
- A full banking experience even though it’s banking for teens, with regular statements, online bill payments if needed, and balance alerts
- Some incentives to save and a reduced urge to burn through a teen prepaid card’s balance
- An option to graduate from a teen debit card to a fully-fledged adult account, with an ability to transfer any remaining balance
A mix of some, or all, of these options in prepaid cards for teens will help a young adult learn the good spending habits necessary for a sound financial future. It will also help parents guide their children through the growing pains of financial independence. Situations differ, and all debit cards for teens have their individual strengths. Shop around. The search for a debit card for teens begins by listing your needs.
Image source: Rankia
Are you looking for prepaid debit cards for teens that will teach your teen the value of a dollar? Or are times tough, and you need to keep everyone’s budget tight while still allowing some freedom via a teen debit card?
Or maybe you’ve snagged your first summer job, and your newfound wealth has you looking at banking for teens.
Let’s find out which card works best for you.
Capital One’s MONEY: A Debit Card for Teens Who Want a Bank Account
Capital One’s MONEY debit card for teens offers the best value overall, for both children and their parents. It’s biggest perk: the fee structure. Namely, it has none, a rarity for teen prepaid cards.
The account has a unified “team” feel to it, allowing parents and their child to manage the debit card for teens’ balance online or via Capital One’s app. The latter also sends alerts, as well as texts, for all transactions made with the prepaid cards for teens.
Capital One also offers a 0.25 percent Annual Percentage Yield, giving teens a slight incentive to save rather than spend with this teen debit card.
The prepaid debit card for teens also teaches the all-too-common habit of hunting for no-fee ATMs. Fortunately, withdrawals from the Capital One MONEY card are free at 38,000 Allpoint ATMs and 2,000 Capital One ATMs.
Lastly, deposits can be made on these teen prepaid cards by using the app’s mobile deposit feature. This snazzy trick lets teens photograph a check and have the money show up in their account. (Or they can add to this teen debit card via direct deposit, if they’re employed.)
TD Go: The Teen Prepaid Card for Monitoring
Parents concerned about their teen’s spending should consider TD’s Go debit card for teens, which offers the most ways to monitor your child’s spending. It includes online monitoring, as well as customizable email and text alerts that summarize your teen’s spending habits.
The alerts create a live feed of the teen prepaid card’s use, perfect for parents on a budget or those who are worried their teen won’t grasp the responsible nature of having a teen debit card.
TD Go also has Visa’s Zero Liability fraud protection policy, which monitors for unauthorized use for the day when your teen loses his or her wallet or card. TD Go’s prepaid cards for teens also come with the added security of the latest chip technology.
The teen debit card also teaches thrift by limiting ATM withdrawals to $60 per week. Best of all, the debit card for teens has a single fee—$4.95 for enrollment.
FamZoo: Prepaid Debit Cards for Teens Building Good Habits
Image Source: FamZoo
FamZoo turns its prepaid debit cards for teens into a learning opportunity for the whole family.
FamZoo’s debit card for teens deploys a host of good habit-building tools, such as savings incentives, all controlled by the parents, who have an overview of account activity via a snazzy app and website.
FamZoo’s strength lies in its full engagement, allowing the budgetary process to be a family affair. This separates it from other prepaid debit cards for teens. FamZoo also has no or very low fee structure for common transactions, like the other prepaid cards for teens already mentioned.
Naturally, this debit card for teens comes at a price, and FamZoo’s has a somewhat convoluted monthly fee structure.
It’s not the tidiest of solutions among prepaid credit cards for teens. But if you and your family are willing to commit to the habits FamZoo builds, this may be a good and long-lasting debit card for teens.
The Alternative: Regular Prepaid Cards for Teens
Looking for a single-shot solution to your burning urge for a debit card for teens? Skip the whole long-term commitment required from major financial institutions offering banking for teens and just buy them a regular prepaid card.
Prepaid cards for teens come rife with additional hassles, which may overwhelm an already busy parent or teen. Prepaid debit cards bought over the counter at drug stores, major chains such as 7-Eleven, and store-specific gift cards have the same spending-limited power as prepaid debit cards for teens.
These cards, which include big names such as Green Dot, MasterCard, American Express, and others, act as one-time cash infusions for your child. Some can be topped up, much like prepaid cards for teens.
If you’re not ready to give your kid the reins to a sum of cash in the form of prepaid cards for teens, a plain prepaid card may do the trick.
Conclusion: Should You Get a Debit Card for Teens?
The tense dinner table conversations have become too frequent. The kids want financial freedom and the topic of banking for teens seems inevitable. The parents urge caution before rushing to prepaid debit cards for teens.
But should you consider prepaid cards for teens? There are alternatives.
Cold, hard cash allowances, which have been the go-to for parents since the creation of currency, put a definitive cap on a child’s spending. But do they teach the ability to budget long-term the same way prepaid cards for teens can?
Credit cards offer almost unlimited financial freedom instantaneously, which can be handy in emergencies. Used properly, it can also give teens a head start in building good credit history.
But does this outweigh the risk of overspending into a permanently damaged credit score, something that cannot happen with prepaid debit cards for teens?
Modern checking accounts let the main account holder issue a number of debit cards, which can be distributed to other family members. But rather than teaching your child how to budget, those cards allow a dangerously direct line into the whole family’s funds. Isn’t a teen debit card a better option?
The answer, as always is: it depends. Prepaid cards for teens do offer financial independence without risking harming a future credit score. But some teen prepaid cards also charge unsavory fees—some of them hefty—for the privilege.
Ultimately, weigh the need to insure oneself from a teen overspending versus the want for them to learn managing their own finances and budgets. It will all depend on your family’s and your teen’s individual circumstance whether they are ready for a teen debit card.
AdvisoryHQ (AHQ) Disclaimer: Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info. Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.