Discover Unveils New Prepaid Debit Card for Teens

[flipchick1127]

So recently, Discover unveiled a brand new prepaid debit card for teens with parental controls. It is called the Discover Current card and you can read about it on my blog.

I am curious to know whether you guys think it is appropriate for teenagers to have a credit card or not (or in this case a debit card) and whether or not it is fair for parents to set spending limits for their teenagers. I personally really like the idea. Also, do you think that this service is worth paying for?
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[starshard0]

Debit card seems fine. Credit not so much. I certainly wouldn't pay for that kind of service though.

[RickLee]

..so it cannot be used to buy liquor, for example.

I think the $5 per month is a consideration to not use it, however.

RICKLEE

[flipchick1127]

Exactly. I think it would be interesting to set limits on things like clothing too if your child started to get excessive with her spending. I also am not a fan of the $5 a month, though.

[Mische]

I personally don't believe in giving children debit cards. Sometimes, it really encourages them to spend uncontrollably.

[flipchick1127]

What if you could discourage over-spending by setting spending limits, though? Do you think that would solve the problem or make it worse once the limits were gone?

[Kathryn]

I think it makes a ton of sense. The problem I face with my teen and preteen is that a big portion of the shopping *they* do (just the like shopping I do) is online. It sucks that this particular way of handling that requires a $5 monthly fee or $50 annual membership. I wonder if there are alternatives that don't gouge on fees.

It's surprisingly difficult to find financial vehicles suitable for preteens/teens. I can't get either of them a savings account at my bank, because the only savings vehicle they offer for minors is a custodial account--which is not what I want. I want them to have an account where they can deposit their own checks from G'ma, take out $20 from the ATM if they want to buy something, etc.

I don't see why giving a kid $20 on a prepaid debit card would be any better or worse than giving them $20 in cash, in terms of teaching them good spending habits. In fact, having older kids handle their own online purchasing would probably get them to start thinking about things like shipping costs and sales taxes.

[flipchick1127]

@Kathryn, Have you looked into other banks in your area? I know that a lot of banks will allow minors to open savings accounts but not checking accounts (without a parent cosigning).

@fast1 I agree that teenagers should not be allowed to use credit cards. I do, however, think that the teenage years are the best time to be educated about how credit cards work and the risks involved. Too many people go to college just to end up in severe credit card debt.