Would you give your teen a prepaid debit card?
My oldest son Ryan is only ten and a half, and I’m already considering getting him a debit card. Every other week when my husband gets paid, the boys get their age in dollars for allowance. So Ryan gets $10 every two weeks, Nathan gets $8.00. Nathan has me run him right over to Target for the latest action figure, Ryan saves his. He has $60.00 saved, and now I’m thinking instead of just handing him cash, why not get him a debit card that I can load his allowance on, and keep in my wallet, and he can use it to pay for whatever he ends up buying?
And then, in one of those fortuitous strokes of luck I seem to get every once in a while, I got hired through PayPerPost Direct to do a review of a program called PAYjr., which I wasn’t familiar with, but when I looked at the website, I couldn’t believe how perfect it is for our situation! PAYjr. has two programs available-the Chore and Allowance system, for younger kids, and the PAYjr. VISA Buxx Card for teens. Think of the VISA Buxx card as a Teen Credit Card, but with nowhere near the exorbitant fees of a regular credit card, and with none of the NSF fees of a bank debit card.
David Jones is a North Texas parent, and he quit a high-powered banking job to create PAYjr. , because he saw how banks took advantage of people with NSF fees, and especially teens. The PAYjr. card teaches teens to earn, spend, and save money, and it works like this: you log on to the website, and you create an account for your teen. You list the chores they will have to do, and then they have to log in and check them off as they are completed. You make deposits to your teen’s PAYjr. card to pay for the chores they complete, and you can both track the balances online.
Why a prepaid debit card? Well for me, because I almost never carry cash anymore, I use my debit card for everything. So that’s what my boys are used to seeing me do, hand over plastic. Plus, the card is FDIC insured against unauthorized purchases, so there is no loss if the card gets lost or stolen. A PAYjr. card has much smaller fees too, compared to the monthly fees of a checking account/debit card, or a traditional credit card. Features of the PAYjr. prepaid card include:
* A one-time fee of $4.95 and 50 cents per load to the card.
* After that, $3.95 a month to continue using the card.
* No charge to activate the card, no postage or shipping and handling fee.
* Free access to the Chore and Allowance system
* A page where your teen can design the look of their card.
* Accepted wherever VISA, Interlink (point-of-sale transactions), and STAR (PIN-secured debit transactions) is accepted.
I think PAYjr. is a terrific program, and I applaud David Jones for recognizing what teens want- a cool card that looks like a credit card, but is cheaper, safer, and will actually teach them to stay OUT of debt. I plan on showing the website to Ryan, and seeing what he thinks about it. I’d much rather have him keep one plastic card in his room than a wad of cash, and I’d like him to see the benefits of doing extra chores in return for extra allowance. It’s a great system for both of us!
Hello and welcome to Table for Five! I'm Elizabeth, and this blog started in September 2005 as a way for me to participate in the Mommy Blogging community. I'm married with three terrific kids-boys ages 11 and 9 and a 2 year old daughter. Things I love include my family, coffee, Diet Coke, TV, reading, and Target.
Please contact me at table4five AT gmail DOT com if you would like to discuss anything I've posted here, place a text or button ad, send me a product to review, or provide a guest post. Thank you for stopping by!
This sounds interesting. I wonder what they’ll have available by the time I need to give my son an allowance.
I am skeptical of the teen card. With cash, you can visibly see how much cash you’ve got and you see the dough physically leave the wallet. Cash helps kids make wiser purchasing decisions. Helps with prioritizing.
It could be I have a huge bone to pick with the credit card industry. I’m working with UnfairCreditCardFees.com fighting the many fees, especially the interchange fee that is charged to stores when consumers use credit cards. The thing is that these stores are forced to raise prices on all their stuff to compensate for the lost revenue. Do you think cash payers get a discount? Nope. Visa and Mastercard are laughing all the way to the bank while the general public is unaware.
This sounds great in theory, but I wonder if it will cause problems for teens when they are adults and have savings and checking accounts to manage? And the fees are small, but when so many banks offer free savings/checking accounts for good account management I don’t know if it’s worth it. $3.95 is $47 a year. That’s a big chunk of change for a kid’s allowance.
But it is a good idea. I just think the fee should be reduced.
Amanda- 13 to 17 year olds are a huge force in our economy, and I wouldn’t be surprised if they spend more per year on consumer good than even adults do. The only think I can think of for our kids’ future would be something like they have in Japan-your CELL PHONE is also your debit card.I don’t know how it works exactly, but I read in Time magazine that Japanese teens use their cell phone to pay for everything. Sounds interesting!
Triston- Your comment brings up an interesting point- does not having cash actually teach kids how to save money, how to make their paycheck stretch to pay all their bills? I agree that a debit card is not for every teen, especially if they are responsible and can be trusted to go to the mall with cash. But for someone like my youngest son, who has ADHD and gets distracted easily? I’d rather have him carry an FDIC insured card than money that he could easily lose.
Fees- unbelievable what having to accept bank processing charges has done to the price of everything. No wonder the museum snack shop we went to last week didn’t accept debit or credit cards, and either does our favorite Chinese restaurant. It’s inconvenient for the purchaser, but keeps the prices down. I agree that VISA and Mastercard aren’t losing any sleep about it, either.
Dana- Great comment, and I agree that never handling actual cash is not going to help a teen learn how to get all their bills paid on payday, or help them understand that once they have spent what they have, the money is gone. And a debit card is not for every teen, but for someone like my son Nathan? Who gets distracted SO easily? I’d rather have him lose an insured debit card than a roll of bills, which he would do. He loses quarters on the way to the gumball machine, for heaven’s sake.
As for the fees- I Googled “can a teen get a free checking account?”, and got 1,61,000 results. The first one was for a credit union in Boulder Colorado that looks like they do offer truly free checking, but after that, all the links I clicked were for accounts that teens can open, but Mom and Dad have to put up their own Overdraft Loan account or their checking account to cover any overdrafts. I don’t think a prepaid card allows overdrafts, if the money isn’t there, the transaction doesn’t go through- but I’ll check.
I think it’s a good idea, but I agree with Dana that the fees should be reduced. The .50 a load charge is quite steep, if you are talking about loading money on every week.
On the other hand, I do like the idea of tracking chores and tying the allowance to them.
I give my daughter an allowance now, but my son doesn’t get one yet–he’s just about to turn four, and I don’t think we gave my daughter an allowance until she was in kindergarten.
You know? My kneejerk reaction was to say “no”, but the more I think about it? It sounds like a pretty good idea.
Not as their first exposure to money.
In our budgeting and planning and sticking with it, dh and I have found we’re much better about staying on track and not spending more than we should when we have cash instead of just swiping the debit or credit card. You’re much more conscious of what you have in your hand, you know? And since my parents didn’t really teach me (or my sister) how to handle money well, I didn’t do very well at saving or planning or anything. Money - cash or debit card - just kinda slipped through my fingers.
You could have Nathan open up a savings account… one that you can get money out of once or twice a month. I seem to remember some friends in middle school and high school having something like that, and I was incredibly jealous. My dad kept my sisters and my cash in an envelope in a locked fire proof safe in the vault until I was 16yo and needed to open a checking account to pay my part of the car insurance. *sigh* I think Dave Ramsey also has a book or something on how to teach your kiddos how to do well with money, but don’t quote me on that as I don’t think my 3.5yo is ready for financial anything yet.
Oh, and yeah, we tend to frequent the mom-and-pop type stores and farms more frequently (this week I’m aiming to get 60-100 pounds of apples, and I’m paying cash from our grocery budget), so it’s cash or check most of the time anyway. No one at the farmer’s market has a card swiper, and neither does our local donut shop.
It depends on the teen itself. Do they know the value of money? Can they handle finances? I think they have to show that first.
This is a great debate and I appreciate all of your comments and suggestions. I am the CEO of PAYjr and I would like to take a moment and speak to some of your points.
First, there seems to be a lot of discussion around fees that are too high. We could absolutely lower the monthly fees but we would have to then play like the banks do and charge for other things like declines or NSFs. I know from actual data that teens have a lot of declines and NSFs and if I was to act like a bank or some of the other prepaid cards out there, PAYjr could make a great deal more money and you might feel better about the not having sign up for a monthly fee. One of the little fine print fees that you will find with other programs is that every time a transaction is declined, there is a $2 fee. Every time the account is taken over balance, there is a much larger fee, anywhere from $5-$35 (even when parent protect the account with overdraft protection). The huge problem is this…what happens when a retailer runs your card and gets a decline? They try again…and again…NOW, you’ve just paid your bank or other card company $6 for one incident…$3.95 doesn’t sound so bad now does it? If we charged that way, at the end of the year when you add up all the fees you have paid PAYjr, you will not be so happy about it because you’ll find you paid a great deal more and that the fees took advantage of a teen learning to manage their money. Instead, we have chosen to pay for our service with an upfront fee that is simple for everyone to understand.
As for the $.50 load fee…we are trying to cover our cost of moving the money. It cost us money to pull money electronically from your bank and move it to the card. We also have fraud and exceptions to deal with and that fee helps with that as well. If we try to pull money from your account and there isn’t enough to do so, we are charged several dollars in fees.
I sooo wish that we could make this program free, I really do, but I haven’t found a way to do that yet. As we get more people signed up, our costs should go down and I hope that we can eventually use that scale to drive down our cost but at the end of the day, I don’t have the same economics as a bank that makes money off your mistakes…and I don’t want to be like that.
As to the whether debit cards help teach money management skills better than cash, I think it depends on the teen. Kids need to learn with cash, just as they learn to do math without a calculator at first but by the time they are a teen, I would expect they already know the basics of cash. Teenage years are the time to teach kids how to manage money with plastic, because if you don’t, guess who will? The company handing out free T-shirts on college campuses if you sign up for a credit card…
Did you know that more young adults drop out of college because of credit card debt than because of academic failure? To me, the best way to teach someone is with hands-on experience and that is what PAYjr has tried to create…a tool to teach teens to manage money with plastic in a parentally controlled environment.
I would like to pose a couple additional questions that have not been talked about:
How would you get cash to your teen when they call in an emergency situation? PAYjr allows you to load money via the Internet - just last week I received and email from a mom who forgot to give her teen money as he boarded an airplane for a trip. We had money on his card before he landed.
Do you know exactly where your teen spends their money? PAYjr gives you complete visibility into where money is being spent and its not always about not trusting your teens, its also about helping them budget better…helping start the communication about money between parent and teen, which is not a topic most parents like to discuss.
I hope you will all understand that I, and the whole PAYjr team, are very passionate about what we are doing. We are trying to apply technology to create a better solution for parents and today’s youth when it comes to managing money. We are not a bank; we are not Visa or MasterCard. We are parents just like you who are trying to make the world a better place, one child at a time…As a company; we lose money every single month. Most of us have taken pay cuts and left high powered executive banking jobs to do something right. If you have suggestions to help us make the program better, we’ll use them, but please know that we are on your side and we are relying on you to help us make the program better and get the word out because we certainly cannot afford spending over $1 Billion on advertising, like the credit card issuers in the US did last year.
Earn Smart. Spend Smart.
Dave
david@payjr.com
http://www.PAYjr.com
http://www.Buxx.com
http://choresandallownaces.blogpsot.com
Landismom- Please come back to Table for Five and read the comment left by Dave Jones, CEO and creator of PAYjr. He explains exactly why he has to charge $3.95 a month, and how banks get around charging for debit cards by charging other fees elsewhere. It’s a very well-written and informative comment.
Fifty cents a load for the money is what Dave has to charge to physically move the money from one bank to another. He isn’t like a big bank or credit union, who can charge fees on other things instead, like loan interest.
I think we started an allowance for both boys when they were six and eight, and started wanting more action figures than we wanted to buy for them
Thanks for the comment, as always! Glad you are reading!
I love it, but I think at the same time, teens should still be using that trusty ledger, to keep track of credits and debts.
Ledger? Like with a pencil on green grid paper? Do your kids have to talk to their friends on a rotary phone?
Kids will move forward with technology just because they are fast learners. We can encourage this and nurture it and become mentors and empowerers or we can get left behind by our children who tell funny stories about us to their friends. When my son is making a financial decision on the go, I want my him to be able to read his “ledger” from his cell phone.
That seems to be the idea behind companies like PAYjr. Good for you. And thanks for being up-front about your fees.
Stacy- Come back to Table for Five and read the comment left by Dave Jones, founder and CEO of PAYjr. He explains why he charges a monthly fee, and raises some good questions about getting money to teens in case of emergency. I’m liking the program more and more as well.
Oh, and in November, he will be introducing a prepaid Target card for teens, so you can load their allowance directly onto a Target debit card. My kids are going to LOVE it!
Lanna, you make some valid points, but consider this- your son is 14, and headed off to the mall with his friends. He wants to spend his allowance on a movie and a new video game. If it is my son, a wad of cash is likely to get lost, or spent on something other than the agreed-upon purchases. With a prepaid debit card, I can go online and verify that he did, in fact, purchase a movie ticket and a video game. If he doesn’t, I take his card away. So it teaches him to decide ahead of time what he is going to purchase, and then stick to that plan.
I do agree, however, if you live in an area where stores don’t take plastic. But when your boys are teens, they more than likely won’t be spending their allowance at produce stands, or those mom-and-pop farm stores, right? Who knows what our younger kids will want to buy when they are teens!
Graham- I agree, which is why I think the Chore and Allowance system is a good idea for kids under 12, to get them used to the idea that they have to earn the money in order to spend it, and if they don’t earn it, they don’t get it. Then when they are teens, you move them to the PAYjr. system, where you can still tie the money in to chores, and you can also go online and see exactly where they are swiping their card. If they are spending their money on the “wrong” things, you just take the card away.
Dave,
Like I said in my email to you, the comments my readers have made and your comment have so much more discussion potential in them, I think we need to do another post about this subject!
There is obviously still a lot of information that needs to get out there so people can decide for themselves if your system will work for them and their children. Once I get my boys set up on the Chore and Allowance system, I’d like to do another post about setting it up, and how it is working. I’ll email you a copy of the post when it is ready. Thank you for stopping by and leaving your comment with more information for my readers!
Elizabeth
Mom on Coffee- Both of the PAYjr. sytems, the Chore and Allowance system for kids under 12 and the Visa Buxx card for teens, have an online ledger that shows you and your children what money has been credited to their account, and what has been debited. I haven’t set ours up yet, but once I do, I’ll be writing another post about how it works!
Jimbo- I agree. My oldest son, who is ten, is already tech-savvy. I know he will have no problem understanding the electronic ledger used by the PAYjr. system to keep track of credits and debits. Heck, we were at the AT&T store the other day, and they had a live iPhone to play with, and my son pulled up our house on Google Earth with it!
I read in Time magazine that in Japan, teenagers use their cell phones for everything, including to pay for things just like we do with our debit card. I don’t know how it works exactly, but if our cell phones can already play movies, CDs, run GPS and Google Earth, why not have them be our debit card as well? It’s just a matter of time.
I’d rather have a $.2 piece of plastic with a magnetic code on it serving as my credit card than my $500 phone.
The plastic I can lose and I wouldn’t care.
The phone…different story.
That said, I’d definitely give my kids pre-paid debit cards, even credit cards. Have to get their credit score up somehow, might as well game the system for them a little bit.
I like the idea of tying the money in with the chores. For now we have our kids set up with their own checking accounts with debit cards. Our bank doesn’t charge any fees or have any minimum balance as long as the accounts are tied to ours, so we don’t have to worry about any of that. I can easily transfer money between the accounts and track what they are spending and where. I love that, though my daughter feels that I am checking up on her. Yes, I am, but that’s my job!
It’s good for the kids to learn to take care of their own expenses and to balance a checkbook. It’s something that they will always need to be able to do. They might as well learn now, instead of later.
I’m a single parent that was never taught how to manage my money while I was growing up. Unfortunately, now I have to suffer the consequences of my bad financial choices. But with the PAYjr card, I can teach my two kids a better way to manage their money. I’ve read all of the posts here and the pros and cons of cash verses plastic. And I would just like to say that having the ability to log onto the PAYjr website and see exactly where my sons are spending their money brings me great comfort. Cash has a habit of burning a hole in the pocket of our youth today. If they have it, they feel the need to spend it. If you load the money on the card, it is a lot easier for them to say the money. As the saying goes, out of sight, out of mind. My oldest son refuses to keep cash now because he knows that if he has cash in hand, he will spend it; but if I put the money in the bank and transfer the funds to his card then he will save it for something that he really wants to buy. We are giving are kids a feeling of empowerment and the option to make choices for themselves. I support the PAYjr card. It has helped me not only teach my kids to make better financial choices but its also helped me learn where I went wrong in my own life so that I can correct the mistakes that I’ve made.
The prepaid debit card, plus the chore and allowance is great. I wish this had been around 8 years ago for my 21 yr old, I finally let him use my card to run errands/ATM withdrawls etc..a little nerve wrecking to allow a teenager to have your credit card in his wallet.
I learned about PAYjr in Sep and set both of my two their sons up with cards for their birthdays (14 and 16). It has been great, when one has complained of needing money, I simply reply have you checked your list of assigned chores and completed them.
The 16 yr old loves his card, I had it designed with his and his 5yr old sister’s picture on it. All his friends think it is the coolest thing.
Now I don’t have to worry about taking cash out to pay them for chores, nor give them my credit card to make purchases.
AlwaysMom-Thanks for leaving your comment! I’m glad to hear PayJr is working out so well for you and your kids!
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