A prepaid card for entitled teens
See something you want? Wave that plastic card -- the one that says 'Bill My Parents' on it.
Geoff Williams at the CardRatings.com blog recently took out after the "Bill My Parents" prepaid card for teens. This reloadable MasterCard comes with a bunch of fees, including a monthly service fee ($3.95), an ATM withdrawal fee ($1.50), an ATM balance inquiry fee (50 cents), and loading fees of 75 cents to $2.95.
There's also a $7.95 replacement fee, "but not to worry since teens never lose anything."
And then there's the name.
"What parent wouldn't want to encourage their carefree teen to run up a tab and let Mom and Dad foot the bill?" Williams writes.
No kidding. I guess "Help Me Develop a Consumerist, Instant-Gratification Mentality Without Having to Think About Long-Term Consequences" wouldn't fit on a little plastic card.
Bill my parents. How cool is that? You can have whatever you want and someone else will take care of the details!
Why are parents buying into the idea? Don't they want their teens to start thinking "How am I going to meet my needs" vs. "How can I get my parents to give me a credit card"?
Because that's what it is: a de facto credit card. Parents load it, kids spend it. The only difference is that kids don't get monthly bills.
See? Worry-free! Post continues after video.
A better way to do it
Not that a debit card for teens is a bad idea. In fact, two personal finance experts I interviewed told me that cards can be a good way to teach responsible spending.
Jean Chatzky, author of "Not Your Parents' Money Book," has put her own two teens on a debit card plan. They get their allowances electronically and it's up to them to choose among the things that they need or want.
"There are things I no longer pay for: manicures, movies, video games, lunches when they go out with their friends," Chatzky says.
What this teaches, she says, is that "money is a limited resource." If they decide to go to a full-price movie and buy overpriced snacks, it comes out of their cash reserves. They learn to budget, and to save for the things they want but don't have enough money for right now.
All kids should learn how to save for what they want, according to Sharon Lechter, a former member of the President's Advisory Council on Financial Literacy. What would really help that process along is parents learning to say "no."
"We've blown through the age of entitlement. We're now in the age of expectation," Lechter says. "(Kids) don't just think they're entitled, they know they're entitled, and how dare you not give them what they want?"
Her suggestion: When a child turns 13, set up a budget for what the child can buy -- school lunches, clothes, entertainment -- and put that amount on a prepaid card. Tell the child that you will not bail him out if he runs out of money before he runs out of month.
Which will probably happen, Lechter says: "It gives you a teachable moment. 'Wow, guess you better look at how you spent your money and learn from it for next month'."
If it were me, I'd be sure to have peanut butter and jelly in the cupboard so Junior can pack his lunch until the next month's allowance kicks in. With luck, he'll realize he could pack his lunch a few times a week and divert the saved funds toward something else he wants. Another teachable moment!
The card or the cash allowance you give your kid has to be his money. It may come from you (at least until he gets a job) but it should come with the understanding that this is how much you'd normally allot for shoes or school lunches or a new coat.
The solutions for the mistakes he makes have to be his own, too. How likely is he to become resourceful if he's flashing a card that says "Bill My Parents"?
If you give your kid this card, be sure to take him shopping the next time you pick out a sofa. It should be a couch he likes, because in another 10 years he might be sleeping on it. That is, if he ever bothers to leave home.
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|Great article. I actually looked into Bill My Parent and ultimately decided against it. Besides the name being awful, I want my kids to have a little more responsibility. Instead I opened up a MONEY account for my teen with ING Direct. No fees or minimums whatsoever. Also think it's great that they're making financial aspects cool for teens with a Facebook page and sweepstakes. |
Definitely worth checking out, great option for teen banking!
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