Are there such things as teen credit cards?
Financial institutions have introduced what appear to be teen credit cards, but which actually are debit cards that can be used in lieu of cash. Even though they look like teen credit cards, the user can't go into debt. Instead, a dollar value is stored on the card, like a telephone calling card. The monetary value on a card can be replenished online by transferring money from a bank account or credit card. The cards can be used to pay for items in stores or online, and to withdraw money at automated tellers.
If you're the parent of a teen-ager, you might have noticed ads for Visa Buxx, M2card, Pocketcard or Cobaltcard. Children as young as 13 can get the cards with parental permission, and the cards are marketed to young adults as old as 22.
The Concept Behind Teen Credit Cards
Teens and parents might want these cards for different reasons. For teens, the draws might be peer pressure (if a friend has a teen credit card) and the ability to rack up bonus points and get discounts.
Plus, there's the allure of having a plastic card bearing the Visa or American Express logo and imprinted with one's own name.
A parent might feel a little queasy from the notion that Visa is producing teen credit cards to get kids hooked on using Visa cards. What happens if you give your son a taste of debit now, and he's mainlining debt in five years?
The card issuers explain that these aren't really teen credit cards, but are a teaching tool, allowing parents to instill lessons about budgeting, saving and spending within one's means. Perhaps more important, they allow parents to keep track of their offsprings' spending. Parents can go to the card issuers' Web sites to review information about how much was spent and where.
All of these so-called teen credit cards bear the Visa or American Express logo. MasterCard is conspicuously absent, but that will change later this year.
Here's to your credit!
John Tobin
