Image: Man and woman at a nightclub using a credit card © Ocean, Corbis

If you've ever had a recovering addict in your life -- be it from drugs, gambling or another vice -- you know giving him or her money can be a squeamish proposition. Will the money be spent the way you hope, or will it end up at neighborhood liquor store?

Such a dilemma may leave you intrigued -- or perplexed -- about the Next Step Prepaid MasterCard, the first prepaid card designed for recovering addicts. It allows a caregiver to put money onto the card, and then monitor how the money is spent. Is it a godsend? An insult to someone trying to regain trust while they reassemble the pieces of their life? Or maybe it's exploitative, given the $14.95 monthly maintenance fee.

Launched last fall, only to experience technical hiccups and be re-launched in December, Next Step is a natural progression in the niche markets prepaid card issuers have been exploring. For instance, MasterCard's BillMyParents card allows parents to put money on a prepaid card, which they can monitor and use to teach their children responsible spending habits.

Next Step takes the concept of parenting and teaching responsible credit card use to the next level: It's essentially a prepaid card for the adult child who still needs some hand-holding and guidance.

Origins of the card

Next Step's three founders, Eric Dresdale, Ryan Jaffe and Louis Fisher, describe themselves as recovering addicts. Their Achilles' heel? Painkillers.

Dresdale, a 29-year-old who lives in Palm Beach County, Fla., had a successful career in commercial real estate. He drank too much, but it was opiates that were his downfall. After spending four months at a treatment center in Florida, Dresdale still had to lean on his parents for financial support.

"My family was freaked out every time they had to send me money," says Dresdale. His mother had good reason to worry. Dresdale didn't relapse, but he spent his parents' money poorly, buying things he didn't need to help mask his feelings of insecurity and inadequacy.

It was during this time, the spring of 2011, that Dresdale, Jaffe and Fisher conceived the idea of a prepaid card for addicts. It took a while, but Dresdale and his two friends-turned-partners eventually convinced MasterCard of the merits.

How the card works

The Next Step card can't be used in liquor stores, nightclubs, casinos, tattoo parlors, body-piercing establishments, escort services or pawnshops.

"So what?" a skeptic might think. "He'll just go to the ATM and take out money and buy whatever he wants."

But the card can't be used to withdraw cash from ATMs or stores that have point-of-sale terminals that ask if the consumer would like cash back. Additionally, the card's guardian can get real-time spending notifications and receive monthly and quarterly reports to get a bigger picture on how the money is being spent.

Caregivers can also set daily spending limits, as well as put a lid on monthly transactions -- say, no more than $20. For instance, if parents think their 24-year-old doesn't need to buy a Peppermint Mocha Frappuccino from Starbucks every day, a monthly cap can prevent that.

Or if you don't want the cardholder to spend more than, say, $15 per purchase, you can cap each transaction. The user's photo can be printed on the card, which should prevent a recovering addict from selling or trading the card.

Those safeguards don't mean the prepaid card can't be misused. Shauna Acquavita, an assistant professor at the School of Social Work at the University of Cincinnati, says, "While it may make the family member think they have a sense of control over the money they provide to a person in recovery, if a person wants to use, they will find a way, whether it is exchanging food for drugs, buying mouthwash with alcohol in it at the drugstore to drink, and so on."

Dresdale agrees. "Nothing is 100% foolproof, and we don't tout ourselves as a panacea for addicts," he says. "We've tried to create this to give as much accountability as we can and to be the best option out there, but if somebody doesn't want to use this, they don't want to use this. We don't want to be considered a relapse-prevention tool."

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