The other day, my daughter told me that a girl in her class got a Credit Card for her birthday. I stated that either she was mistaken, or the kid was talking about a pretend Credit Card, after all “…you can’t have a credit card when you are under 18 years of age, because you can’t legally sign a contract.”
TheWife informed me that I was wrong, and that Visa, Mastercard and the like had actually started to market cards to kids. I listened, but was still skeptical. After all, there was still that whole, “of legal age” thing. Then yesterday’s post over at BusyMom in talking about dealing with allowances for her kids mentioned the programs (fortunately complete with links) to programs like Visa Buxx and The Allow Card.
Once, I picked my jaw up off the floor, I went to the article she mentioned from the Wall Street. I was flummoxed. How did we get to this point, and how do we get back out of it? Not once in the articles, web site, did I hear mention of a Savings Account. Cash… yes, old fashioned checking accounts… yup, the “problem with figuring out which kid charged something on eBay” (exactly who are these parents that let their children use their credit cards and not know what the child is buying?) and more. But not a single mention of a CD, Money Market, or Saving Account.
Is it any surprise then when you look at the trend in Personal Saving Rate, it has been trending down for years, and was even Negative for most (if not all) of 2005 – 2006?
Now, I have to admit that in the digital age, cash is not only “old school” it is almost counter productive with so much that is bought online, etc. But there are plenty of pitfalls to it as well. Before considering a card like this for your kids, take a look at this article which give both the pros and cons of these types of programs.
But ultimately whether you decide to use this tool for your kids or not. Teaching responsibility and savings is important too, so do yourself (and them) a favor and teach them the benefit of SAVING as well the quickest and easiest ways to spend.
(I’m just glad to find this article from the Washingtonpost.com that also thinks that marketing cards to kids is an nefarious idea. )
And like you mentioned, since a credit card is “proof of legal age” then they have a key to all kinds of websites that they shouldn’t be looking at. Of course, I can only imagine the looks on the parents faces of the abashed child that tries to explain “my card is empty because I didn’t understand that $4.95 per minute would go so fast!”
All that aside, let’s not forget that monopoly is doing away with cash and replacing it with a debit card as have our school cafeterias. It’s not far into the future that cash will become passe and something merely for collectors.
Thanks for scaring thr crap out of me. Now all I can think of is my wife and 2 girls going on individual shopping sprees. Kill me.
Great, not only does my wife love to use the platinum card but soon my toddlers will do as well. i believe in teaching my kids early on about managing ehir own money and that involves saving, weekly allowance, and NO credit cards. When they are older, fine. But before then, what’s the point? Impress friends?
Nice weekend
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Visa has a gift card that is an actual Visa looking card. Perhaps that’s what the child got?
Busy Girl has a savings account, but, she does not spend money from it. Any paycheck or money gift she gets, part of it goes into that account.
She is very good with her money, but, I can see an advantage in having that type of account so she can see where she spends, and, I think that visual accounting might be helpful to her. Checks are just too much of a PITA to write anymore.
It can be a teaching tool for a weekly allowance and might not end up in the cushions of the couch courtesy of your younger brothers, either.
I like the suggestion of that article to use a register, but, as for the concept of “free money”, I don’t think it’s any different than the risk of using checks.
Nope, I don’t see this in my family.
Credit cards for kids? You’re joking. Hides this article from my daughter.
I LOVE Michelle Singletary (the Post writer). I think she should be required reading. Still, I don’t think the card is a horrible idea. In reading about both cards, they are just gift cards with the VISA or MasterCard logo. They actually give parents more control over and insight into their child’s spending than cash does. It is a low risk way of learning to manage balances.
I think these are appropriate tools for children, when they have the maturity to use them. I RARELY use cash, so my children are going to grow up seeing me use my debit card for all transactions. Cards like these will help kids understand how our debit cards work, and are an opener to real lines of credit. Pre-paid spending cards have been around for years, it’s just now that the credit companies are picking up on them and marketing them for kids.
My son had an Allowcard, and just to give you an idea what an inconvience it was for him to use it is outrages.
My 18 yearl old son recently flew to Europe, and with him he had his Allowcard, naturally it had an ATM pin to be able to use all over the world. Not so fast though.
When he was stranded at Kastrup airport I couldn’t get hold of Allowcard, I waited for 30 min on the phone to hold music, and finally a voice said that I could leave a message because they were so overloaded with calls and the were understaffed, and asked me to call back later. When the truth was, there was no one there at all at the customer service desk.
When I finally got a hold of the founder of Allowcard, I was furious. In the Agreement there is nicely stated all the fees for withdrawing money abroad, and all the “MCC Codes were allowed”. MCC Codes, are what you allow your kids to shop at, in the codes there is one that says “international affairs”, someone would think, yes that means international traveling etc.
No, it meant nothing of the sort, didn’t get an answer what it meant either. So then I finally been jerked around and connected with two other people, and the last person said that I had to call them to “TURN ON” the card for the perticular country he was visiting, and he added that WE ALL have to do that to our own cards! I was??? I never have to do that to my cards. Well then he excused himself that this was a ‘kid’ product. I asked him where in the agreement it stated that I had to TURN ON the card, and he said verbatum: We don’t have to state that in the Agreement. Then I was asking how was I suppose to know that I am suppose to call and TURN ON the card? All the fees when it came to domestic use and international use was nicely stated but nothing else. He said that we were not getting anywhere, and it was leading into an argument, and hung up on me. This is great customer service, and understand while they charge you fees to withdraw money, fees to make purchases outside the country, fees to have this account, while a savings account is free. No, turn your back on the Allowcard and their gimmick, because all you do is paying for their obnoxious existent. It is not as great as they want to state it to be.