Credit card for teens???

klmno

Active Member
I just saw a commercial about a prepaid credit card parents can get for teens. It sends a text to the parent when it's used and I think it says what is was used for. It's pre-paid so there can be no overdraft and the parent can cancel at any time. I'm thinking this could be useful.

Has anyone tried anything like this?
 

klmno

Active Member
The commercial showed a mom saying she never really knows where the $20 bills go that she gives her teen son. He wants some money, of course, and this is a way for her to give him an allowance, teach him to budget, and still account for the money, without the risk of being overdrawn. I think I might look into it. It would be great if it lead to the teen having some credit built up on his own name too but I'm not sure prepaid cards really help with building up credit.
 

DDD

Well-Known Member
The experts say "secured credit cards buld credit ratings". We didn't do that. Now, at 25 difficult child can not get approved for a home mortgage because he is a "credit ghost". Translated he listened to us and never accepted an unsolicited credit card. We thought it was wise. This week as I try to get him a home...it appears it wasn't. Sigh. Parenting is such an itch. DDD
 

klmno

Active Member
I thought I'd heard experts say that, too. But I think I remember asking about that once at a bank or walmart and hearing that it did not because it didn't show any repayment if it's paid up-front. I don't know but this is thru a major CC company so I would assume that if there are no issues for a year or two, they'd probably off an entry level CC to the teen at some point. I don't like the idea of cosigning for him for anything within the next few years but I might not have any choice.

It won't be for a car though- I planned this out! Since Plan A fell thru with the bankruptcy 2 years ago, E will get my old car to drive. He won't get it put in his name unless he chooses to go straight into the work force instead of college and is able to support himself plus pay for auto insurance- then I'd sign it over to him- or I might confer with an attny on how to have him "buy" it from me in a way that helps him build up his credit. Now, I just bought a new car that he actually picked out (it's a nice compact- not an expensive sports car). It is being financed for 5 years- longer than I wanted but that's the price I'm paying for the BK. Anyway, E will be 22 when it's paid for. If he goes to college, he'll get this one turned over to him when he's out of a 4-yr college and with a job, able to pay his insurance. I'll sign it over to him and he will only have to worry about paying back low-interest student loans, not a car payment. Then I'm done helping him with transportation, my BK will have fallen off my credit report and my credit will be rebuilt! I'll take this old car back, sell it for $500 or whatever, and buy what I want for me! And E will be building up his own credit by paying back low-interest student loans. That's the Plan A right now-....now can someone get him to make up his mind and tell me if he still plans to go to college or if he really means that "warning" that he plans to just leave and go across country to "find a job somewhere" when he turns 18 and is out of HS? (notice: I'm not signing my car over to him and he will not have permission to borrow it to move across country.)

on the other hand, at the rate he's going right now my old car will be sold, he'll be lucky if he can even make it until he's 18yo without getting locked up again.
 
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InsaneCdn

Well-Known Member
There is a difference between a "prepaid" credit card, and a "secured" credit card.
A prepaid card doesn't build credit rating, per se, but using it well will give you a bit of a toehold into that CC company and into a secured card.

A secured card is like the deposit on an apartment. You put money up front to the bank (not into the CC acct), usually for a year. It is worth a certain % of the credit limit. If you don't make your payments, they close the account and keep the deposit. If you run a clean account for the year, they apply the deposit to your account. But... you are building credit.
 

DammitJanet

Well-Known Member
I thought a secured credit card meant you had to put X amount of money onto a credit card through a bank and it would help build your credit. Normally you start off with say a $250 or $300 limit. You can get more if you put more money in though. Now a prepaid credit card is more like a debit card but you dont have a bank account backing them. You just buy them at a grocery store or Walmart or even online and add funds. I wouldnt think they would report to credit agencies at all. Debit cards dont and it appears banks dont. At least not as far as checking and savings accounts nor anything to do with having anything in an investment account.
 

DammitJanet

Well-Known Member
Oh and I think the one for teens is Visa Bux or even the newest commercial you are seeing is for one done by American Express. I think that is the most interesting one because you can pretty much gps your kid. The kids do have to be 13 though. I was frantically looking for one I could send to Keyana while she was in MO.

My credit union offers a kids club savings account which would have given me the opportunity to put an allowance in and sent her an ATM card but the drawback there was I couldnt open one for her as a grandparent. I dont get that.
 

AnnieO

Shooting from the Hip
Secured credit cards and prepaid cards for teens are two different animals. Not even the same species.

Secured means - your credit limit is whatever you originally put down. You can incur overdraft/late fees if you don't make payments. After a while, they apply your deposit to your balance and it converts to a regular card with a high interest rate. Shows on credit report.

Prepaid means - similar to a debit/gift card. Person has "X" amount to spend. No payments - you add money when you want to. You can go over and incur overdraft fees, but not late fees.

Onyxx had a Visa Buxx. I would NOT recommend this card to ANYONE. She had a $10 charge at a vending machine in Atlantic City NJ. First of all, she wasn't in Atlantic City that day - or ever in her life - and was at school when the charge was supposedly made (not when it hit). When we disputed the charge, they told us it was too bad and we had to pay it. I refused to... So they closed the card and charged my bank account. I disputed THAT and (gee same bank) got it back.
 

recoveringenabler

Well-Known Member
Staff member
If you are looking to build a credit rating, what I'm about to say won't be helpful, however, I got my granddaughter her own debit card through Chase, which is attached to my account. It's called a teen account. I can transfer money into her account online easily and when there is no more money on her debit card that is it, she cannot go over. You can set it up so that if she goes over, it will be drawn out of a savings account, but I opted out of that. You can get text prompts too. She has the ease of a debit card to use, she can order stuff on line, I can transfer money at any time and I can see exactly what she spends. It's worked out really well for us. She's 16, but I got it for her when she was 15.
 
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