Visa Buxx Card
Teenagers plus summer break is likely to mean time for some serious shopping. Banks and others in the credit and debit industry have come up with some ingenious ways to give teens money to burn, but some are far better than others.
Some cards will allow fairly tight control over how much money your teen can access and teach them some valuable lessons about using plastic instead of cash. Most cards that are aimed at the teen market do not allow overdrafts and some allow parents to implement daily withdrawal limits.
One of the better known products is the Visa Buxx Card, which can be used anywhere that a Visa debit or credit card is accepted. The card is available from numerous financial institutions, including National City or Wachovia. Discover Financial Services offers a similar card, the Current Card which provides zero liability for unauthorized use. Both cards, and other similar products, allow kids to make purchases and withdrawals from ATMs, but parents keep the drivers seat, typically accessing web sites or telephone banking to reload funds and track spending.
Caution should be exercised when evaluating the various options available though. With the Discover card there is a $5-per-month membership fee and many of the cards charge for ATM withdrawals and balance inquiries. Others charge a fee for reloading the card or even an overdraft fee if a merchant doesn’t check before putting a purchase through.
An option that may be just as valid, and possibly far less expensive, is for parents to simply set up a basic checking account with a debit card. Wachovia offers a free basic checking account with no monthly fee or required minimum balance. BankingMyWay.com is a great search tool to compare checking account options that may be most suitable for your teen. If your teen will be mostly using the card to make in-store purchases they will have different needs than if they use the card to access cash via ATMs.
Don’t spend a lot of time figuring interest into the equation though. Most checking accounts offer incredibly low interest rates and with minimal balances, teens are wiser to concentrate on learning how to spend carefully than in using a checking account to earn interest. Investment banking and savings accounts should be handled separately and with far more guidance from parents.
