There are quite a few prepaid cards for teenagers, but there are so many different options out there. We take a look at the top selling cards so that you can decide which is best for your teenager. We also see how Go Henry stacks up against the competition to see if it truly is one of the best prepaid cards for teenagers.
Why use prepaid cards for teenagers?
More and more kids are needing to have the ability to spend their pocket money or allowance using online retailers. As adults we know that shopping online can be one of the best ways to get value for money. In the same way, adults want access to cheaper online retailers our children want access to the same retailers that we use, so they can make the same savings.
Prepaid cards are different to credit cards. You typically purchase a prepaid card with a value predefined on the card. Unlike credit cards you cannot spend more than what is on the card. For example, if my prepaid card has £25 of credit on it, you cannot purchase something for £26. It's a similar concept to pay as you go mobile phones.
So using prepaid cards for teenagers is ideal if you want them to get used to the idea of spending online. This is especially useful If your kids have an Xbox, PS4, smartphone or tablet as these devices are designed to integrate with electronic payment methods. This means your options are as follows:
- Buy gift cards from a retailer and then redeem the gift card online.
- Give your teenager access to your credit or debit card.
- Make use of a prepaid debit card that your child or teenager can use online.
Why gift cards aren't up to it.
The problem with gift cards is that they can only be used once and then they have to be disposed of. Some gift cards do permit you to top up online using your credit card, but this is just credit card payments by proxy and defeats the object of using a gift card. Quite often the gift cards are left with unused credit on them, which is what the gift card companies want as they get to keep any unspent money left on the card.
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Some gift cards do let you load the value of the gift card into an online account. However this can cause the following problem:
I buy an Apple iTunes gift card for £25, I load the £25 into my online iTunes account. I make several purchases over the course of a couple of weeks. I am left with 98p in the online account. I then want to purchase a music album for £9.99. To use the 98p that is in my online account towards the new album, I have to top up my account with another iTunes Gift card, to give me enough funds to buy the album.
The alternative option is that I register my credit card online and combine the 98p with my credit card to give me sufficient funds to make the purchase. In the example above I would have £9.01 charged to my credit card and the 98p gift card balance would be used.
It's not a very straight forward purchase especially if your child or teenager is making the purchase. To be honest I normally forget that I made the purchase for my child using a credit card and they get the album for free. This doesn't really teach them the value of money, just that when you want something Mum or Dad use their cards and magic happens.
The other problem is it's not always easy to check how much money is on the card. Therefore, you may need to carry a backup payment method to use in conjunction with the card. You may be in a shop making a purchase and need to add to the gift card balance to make a purchase. This doesn't really give the holder of the gift card financial independence.
Letting your teenager use your card
This is probably the path of least resistance from a parental perspective, but it presents many challenges. Firstly I am not sure that handing over my credit card to one of my sons every time they ask, teaches them the true value of money. Secondly as well as tracking my own spending online, I have to track what my children are spending. This doesn't teach them ownership or money management skills, it is very unlikely as a parent I will go through my credit card statement with my children and review the months spending to educate them on managing finances.
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The credit card bill will need to be paid, but I am not sure that as a parent I would let my children know when the bill is due to be paid. On the rare occasions when I have allowed my children to do this, I have managed to get the cash from them almost straight away. Whilst this ensures I get the money in exchange for whatever I have purchased on their behalf, the point of providing them with their own facility to make electronic purchases, teaches them personal responsibility. If my children can manager their own card they learn how to manage electronic money systems which will serve them well in adulthood.
The third way - prepaid cards for teenagers
Just to be clear prepaid debit cards are not just prepaid cards for teenagers. Anyone can use a prepaid debit card. I have used them over the last couple of years when an online retailer charges a fee for using a credit card. The reason I do this is that if my details are misplaced by the online retailer, there is limited damage that can be done by a fraudster. It can take several days or weeks to have the money refunded from a fraudulent transaction. This is incredibly frustrating if you need access to the money whilst investigations are taking place. When using your bank account debit card a fraudster could empty your account leaving you in financial difficulty, hence I only use credit and prepaid debit cards when shopping online.
A friend of mine recently had their debit card double charged by an online retailer for £150. That meant in the build up to Christmas they where £150 short in their account, it took the retailer 10 days to acknowledge the mistake and issue a refund. This is not a good thing in the build up to Christmas.
Credit Cards come with insurance against online fraud and just freeze the credit card if it is used fraudulently. You don't have to pay the balance and all interest is frozen whilst the fraud is investigated. Having your card blocked is inconvenient but having your current account emptied is horrific. Using a prepaid card limits the damage if the worst should happen which is why they have gained in popularity over time. A fraudster can only spend what is on the card. It is also why using prepaid cards for teenagers is a great thing. As well as limiting the damage a fraudster can do, there is limited damage that a teenager can do.
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I have digressed slightly, but I feel like the above point is worth mentioning. So what specific features are needed when looking at prepaid cards for teenagers? As a family we have been looking for the best solution that meets our needs. The following are what we considered high priority:
- Being able to transfer money onto the card easily.
- Passworded security.
- The ability to manage the card using a computer or a smartphone app.
- The ability to block the card conveniently should it get lost or stolen.
There are lots of cards on the market that meet this criteria. However as we are reviewing prepaid cards for teenagers the following should also be considered:
- Parental controls on spending both online and offline
- Notifications when money has been spent or withdrawn from the card.