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3 best prepaid cards for teens

These consumer-friendly, low-fee cards can help your teen learn to manage plastic responsibly.

By MSN Money Partner Aug 20, 2012 10:58AM

This post comes from Kali Geldis at partner site on MSN MoneyThe Great Recession has had at least one positive upside -- a renewed dedication to financial literacy. And that upside has been on all levels, from senior citizens to teens.


Image: Father and son (© Bill Cannon/Photodisc Red/Getty Images)In the spirit of helping your teen learn more about how to manage money, we've selected three prepaid debit cards that are consumer-friendly.


After the passage of the Credit CARD Act, many parents wondered how they were going to teach their kids about using plastic responsibly if teens were barred from getting credit cards. Prepaid cards have risen in popularity, filling that hole.


However, there are a few red flags parents should look out for when selecting a prepaid card for their kid. The first and most important red flag is fees. Prepaid cards can be riddled with fees, as that's how banks profit from these products instead of levying interest rates on balances as they do with credit cards. Each of the cards below has a fee schedule that you, a responsible and engaged consumer, should examine thoroughly before you sign on.


So here they are, your best bets for prepaid cards that will help your teen get used to using plastic -- the training wheels of credit. (Post continues below.)

UPside Clear from Visa

The UPside card issued by Visa offers three different plan levels, but we're recommending the Clear plan as the best option for teens. Why? Fees.


The Clear plan has no membership fee at all, compared with $2.99 a month for the Access plan and $29.95 annually for the Edge plan. It's free to load the card, which has a $1,000 limit under the Clear plan, from your checking or savings account.


There is a $2.50 fee to load money from a debit or credit card, which we wouldn't recommend, and the card doesn't have ATM access under the Clear plan. If you're a parent concerned about being able to track where your money is being spent, this is actually a big plus, because you'll be able to see where all of the money is going based on where the card is used.


And all transactions are posted in real time, a special feature that allows parents to track the balance on the account and reload if needed. Beware of the customer service fees -- phone inquiries can cost you $2 apiece.


USAA Prepaid Card

This card gets some big credit from us for limiting fees. The USAA Prepaid Card has no monthly fee, no activation fee, no fee to reload the card, and gives parents a lot of control over how the money is being spent. The card can be used anywhere MasterCard is accepted, and you don't have to worry about losing the card. If you have a forgetful teen, there is no cost to replace the card, a fee that can be upward of $10 with other prepaid products.


Money can be added via the USAA site or its mobile site, and parents can even set up alerts on account activity if you want to watch your teen's spending more closely.


And, luckily, while many USAA products are open only to current and former members of the military who have honorably served and their eligible family members, prepaid cards are open to the general public, according to a company spokesman.

PASS from American Express

The PASS card is a great option for families. Much like the USAA card, the fees on the PASS card are very limited, which means your teen won't be worried about allowance being eaten away $2.50 at a time. Make sure your teen knows that AmEx allows one free ATM withdrawal a month, then charges $2 a withdrawal after that. That's the biggest fee your teen will face.


Unlike other prepaid products that charge for customer service, the PASS card gives you free phone and online customer service access. Also, the card can be reloaded with direct deposit, through your checking or savings account, or using GreenDot MoneyPaks or Vanilla Prepaid Reload. And though you might not care about how the card looks, teens can customize their card by uploading any image onto the site.


More on and MSN Money:

Nov 17, 2012 2:38PM
The info on the USAA account is not correct. You can't open an account unless you are a member and you can't be a member without military service. 
Nov 27, 2013 12:28AM
Check out the Akimbo Card. No monthly fee.  Create additional cards and set up automatic allowances.
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