by Joseph Kenny | 10/17/08

Credit cards are en vogue even if the results of using such fashionable payment methods are less then stylish. This isn't stopping the millions of consumers who use a credit card for purchases ranging from the mundane to the extravagant. The next generation of consumers, teenagers, is seeing the allure of the quick and easy purchases that can be made even if it's not affordable and wants desperately to be part of it.

Credit cards allow a lifestyle that may otherwise be impossible. Even though the repercussions of living beyond your mean is nothing but stress and hardship consumers are more then willing to take part in the facade. Teenagers look upon this as status quo and strive to reach it the same way their parents have; through credit cards.

Teens and credit cards are never a good idea. Many teenagers are not versed in the responsibility needed to use a card wisely much like most of their parents. When and if a teen receives a credit card they are not prone to think ahead to how they will repay the loan and what will happen if they fail to do so. A solution that is quickly becoming popular with both teens and parents is the prepaid credit card which is offered through many credit card companies.

The prepaid credit card works much the same way as a gift card. The parent will load money onto the card which then can be used at any retail or merchant that accepts the credit card company that issued the prepaid card. There are several benefits to using such a card including:

• Convenience


• Security


• A lesson in budgeting


• Parents can track spending habits


• The cards have overdraft protection


• A limit is placed on spending


• No Overdraft fees


• No Interest charges

Parents feel secure giving their teens a prepaid credit card knowing that the kid will only be able to spend up to the limit on the card. This fact attracts parents and their teens to the prepaid credit cards; there is no risk of spending more then you can afford. Many who oppose the cards claim that this benefit is also a major pitfall that shows teens that there is no accountability when using a credit card.

Parents need to actively teach their children responsible money management including budgeting to avoid any misconception or confusion. When allocating money to the card parents should be firm and tell the teen that once the money is gone it is gone. There is no such thing as a free lunch. Many parents are using prepaid cards in place of cash allowances for the ease and convenience. Not only this, but parents will be able to monitor their child's spending habits online in monthly statements. This gives them an added sense of security knowing what the money it going towards.

While prepaid credit cards are not exactly the same thing as credit cards they can be used just the same. By granting a prepaid card, parents will be able to teach their teens valuable financial lessons that will, hopefully, translate over to the real world. Teens with credit cards are irresponsible and are known to rack up an amazing amount of debt in a very short time. By showing them how quickly money can disappear the prepaid cards teach teens responsible spending habits and demonstrate that those charges have to be paid off somehow.

It's up to the parents to stick with a firm plan if they are going to give a teen a prepaid credit card. You can not fill it up every time the teen spends the entire amount that was placed on the card. Set a monthly limit and explain to your child that once the money is gone then they will just have to wait until next month. If you want to take it a step further, allow the teen to borrow money and take that amount from next month's total. You may also want to have your teen work for the money through chores or at the family business until they get a job on their own.

Prepaid credit cards can be a great option for parents who do not want their teenagers to have access to a credit card. Used responsibly and in conjunction with financial education, these prepaid credit cards are a great tool for the preparation of the real world.