What Every Parent Needs to Know Before Plunging into a Prepaid Credit Card for Teens

The Pros

A prepaid credit card for teens can be a very useful learning tool. Put your child's allowance on the card and he or she can learn to budget and will soon understand the value of a dollar. It will also teach your teen that plastic is just like cash, and all those card swipes do add up over time.

Another great thing about prepaid credit cards is the fact that many of them allow you to track online spending. Let's face it, the world can be ugly. If you give your kid his or her allowance in cash, you really can't know for sure where it's going. Use a prepaid credit card and track spending online and you know exactly where the money is being spent.

The Cons

So now that you know the upside of a prepaid credit card for teens, it's time to learn the downside. First and foremost is the fees. You're going to have to pay a fee to get one of these cards in the hand of your teen, so it's going to cost you a bit more than just giving him or her cash outright. That being said, the lessons these cards teach may well be worth the expense.

While many may feel a credit card is a luxury that will only spoil our children more than they already are, it's important to remember that they can actually be a tool used to impact financial wisdom at a young age. Keep that in mind when deciding whether or not a prepaid credit card for teens is right for your family.