Jun 10, 2013 Sean Albert
One of the challenges of parenting in the modern world is teaching kids about financial literacy. With so many complicated and evolving payment options, it can be a difficult task to educate young people about best monetary practices. However, financial institutions that want to assist parents in providing youth with a stable financial future may want to implement prepaid cards into their offerings.
Although credit cards have long been a popular option for spending, some warn that it may not be an effective tool to teach teens about financial responsibility.
John Monderine, a debt collection expert, said giving a credit card to a teenager may not be the best idea. Many do not understand how credit works and risk running up excessive fees. However, he did stress the importance of educating children about finance.
"Remember, if your child has a job, they might qualify for a card even without your approval, so it's best to teach financial wisdom as early as possible," said Monderine.
Although credit card use can be a risky proposition for young people, U.S. News stated that prepaid and ACH card use can be a great way to teach kids about money. According to the source, one of the advantages of prepaid cards is that parents can monitor activity. This means they can easily review the spending habits of their children and adjust settings accordingly. Parents can limit what places their kids are able to spend at and set up email alerts so they are notified when a transaction takes place.
Another benefit of these products is that it can help parents give funds to students away at college, as prepaid cards are easy to reload online.
With the flexibility and monitoring services offered by prepaid products, financial institutions would be wise to start marketing these cards to parents seeking to educate their children about managing money.