8 - 2012

Take It to the Bank – 4 Benefits of Debit and Prepaid Credit Cards for Teens

The years between ages 13 and 19 are the most difficult time in a young person’s life because they have many of the feelings and emotions that comes with being a young adult, but lack the maturity and responsibility to adequately deal with them. Parents are often forced to walk a fine line between doling out age-appropriate discipline when behavior gets out of hand and finding ways to train their teenager up in a way that results in them growing into a respectable adult.

Teenagers Are Expensive

One of the most trying subjects during this time is money. Teenagers are expensive! As they grow from young child to young adult, so do the price tags on the latest and greatest electronic gadgets, apparel, and activities. One family I know has two teenage sons, and in a single month of summer vacation they spent $230 for a two-day camping trip, $80 for a single day of paintball, $200 for tickets to two different concerts, and $145 for fast food and pizza. That’s a total of more than $650, and it doesn’t include the allowance the kids received every Friday. They could have rented a vacation house for a week at that price!

Set a Family Budget

Once they realized just how much money they were spending on their children’s activities, they sat down together as a family and discussed ways to spend less. After many hours of debate and negotiation, they found a compromise that everyone could live with – a PayPal student account. The parents agreed to shell out more allowance, but in return they would stop paying for extras. If the teenagers wanted to attend an extracurricular activity, then they would pay for it themselves.

As a way to help supplement their allowance, the teens agreed to get part-time jobs and asked their grandparents for prepaid credit cards instead of tangible gifts for birthdays and other holidays. Within a year the parents had saved enough for an extra semester of college for each child! Here are some additional benefits they discovered that came with a PayPal
student account and prepaid credit cards.

• Different Address, Same Account

Just because a teen goes off to college doesn’t mean they have to give up the familiarity of their PayPal student account or prepaid credit card. Because most retailers take major credit cards, the PayPal student account or other prepaid credit card is welcome at locations around the globe. This means teens never have to be stuck for a way to pay for things they need or want.

• No Credit Checks

Unlike a standard banking facility or credit card company no credit check is required to open a PayPal account. Anyone can open an account and set up student accounts for teenagers in their family. However, unlike a standard checking or savings account a PayPal account does nothing to help a teenager build credit or increase their personal credit rating.

• Less Risk of Overdraft Fees

While it’s possible to overdraft your PayPal balance, if this happens then PayPal just charges the bank account or credit card associated with your account. Former American Vice-President Dan Quayle explained it like this: “Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement.” So as long as you manage your funds and don’t spend more than you have in your account, you won’t suffer hefty penalties for overdrafts.

• Convenient Account Access

Teens can track their spending and check their balance on their computer, smartphone, or tablet while attending a college or university in another part of the country – or even another part of the world – just as easily as they could if they were at home. And with online banking, they can get checks free shipping included by ordering and having the checks send to the bank or that will come straight to their dorm room or other living quarters while attending an institution of higher learning.

• No Age Limit

While there is an age limit for having a standard PayPal account, student accounts at standard banks have no such restrictions in many parts of the world. The same goes prepaid credit cards. As long as the parents are willing to take the responsibility for the student who will use the account or card, they can open student accounts for every child in their household.

Additional Student Banking Options

Some financial institutions, such as the Bank of Montreal, have accounts for every age group including young kids up to age 12, teenagers ages 13 to 18, students who are 19 and older, and recent graduates who are 19 years old and older, each plan offering its own benefits.

  • Checking
  • Saving
  • student budget calculator
  • student line of credit
  • Financial planning

Another incentive is a low-interest credit card that offers additional perks such as earning airline miles or cash back according to the purchases you make. Using a credit card is fine as long as the person has the resources and space within their budget to pay down the debt. Because they’ve seen firsthand the horrors of what could happen when students mismanage their personal funds, some banks offer extra help with ways to save and manage finances, and many provide a variety of services and tips to help students meet the goal of being financially independent.

About the Author

Jason Monroe is an internet researcher who knows the value of money. During his career as a freelance author he discovered www.personalchecksplus.com which inspired him to create a whole series of articles that offered financial advice for both parents and students. When Jason isn’t writing, or researching information on the topics he’s writing about, he can usually be found outside taking part in activities such as backpacking through the wilderness and spending time with his family and friends.

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