KIDS & amp; CASH A solution that raises questions
Make sure kids are ready to handle the cash cards.
By STEVE ROSEN
KNIGHT RIDDER NEWSPAPERS
Here's a question to ponder if your teen-ager is heading off on a ski trip or other vacation destination over the holidays without Mom or Dad: How will your teen pay for meals, lift tickets, souvenirs, pinball games and other expenses that are bound to crop up?
For many parents, the answer is a piece of plastic known as a prepaid cash card.
The cards, such as the Visa Buxx, let parents transfer money from their credit card or checking account into an online account for their son or daughter. Kids can then use the plastic wherever Visa (or MasterCard) is accepted, including drawing money out of ATMs. As such, these cards are like an online debit card.
Purchases, however, are limited by the amount of cash that's loaded into the online account. So when the money runs out, that's it. Of course, you can add to the account -- though --wouldn't make a standing promise to your teen that there's a 24-hour-a-day tap line to your wallet.
Visa and other card sponsors emphasize that prepaid cards are not credit cards and have plenty of parent controls that, among other things, allow you to monitor where the card was used and how much money was spent down to the penny. Promotional information on the Visa Buxx Web site at www.visabuxx.com also stresses how the cards can help teens manage their money and how they are more convenient and are a safer alternative than stuffing a kid's pocket with cash or even traveler's checks.
All that may be good and true. But I'd be leery of turning a teen loose with plastic -- any piece of plastic -- until there's first been a discussion about how to manage money responsibly.
Janet Bodnar, an executive editor at Kiplinger's Personal Finance magazine, goes one step further. She thinks kids need to show they can manage their own funds before they're handed a cash card.
Here are some other pointers:
UExplain to your teen how the prepaid cash card works and that there is not a limitless supply of funds attached to it, said Jeff Sheets, a long-time consumer education expert in Kansas City, Mo. For some kids, said Sheets, "a piece of plastic is a piece of plastic is a piece of plastic." His point: It can be tough for kids to distinguish one kind of card from another, especially if they constantly see adults pulling out different credit cards, debit cards and store charge cards to make purchases.
UConsider putting your young traveler on a budget, say $25 a day, and make clear that that amount must last until the next day.
USimilarly, set some ground rules if you're sending your teen off with cash or traveler's checks. If necessary, designate an adult traveling with the group to serve as the banker so money gets parceled out in an orderly fashion.
Visa Buxx: How it works:
UParents can sign up online or by contacting a financial institution that issues the card.
UParents can add money to the card from their credit card, check card or from a checking account.
USome banks may charge a fee when issuing the card.
UOnly the teen whose name appears on the card can use the card.
UMerchants might require a teen to show an ID when using the card, such as a school ID or a driver's license.