Many marketing campaigns for prepaid credit cards are targeted to the under 18 crowd. In fact, anyone over 16 can deposit money on a prepaid credit card and then use it like a credit card when shopping or online. Kids as young as 12 or 13 can often get a prepaid card as well, as long as Mom or Dad sign up for it.
Some advocates claim giving teenagers a prepaid credit card gives the opportunity to teach them responsible money management skills, while critics argue that we’re just showing them how tempting a real credit card can be and setting them up for disaster.
As far as the financial companies are concerned, it’s difficult to make much money on a prepaid credit card since they can’t charge interest on unpaid balances. They typically charge a sign up fee and then fees whenever a deposit is made to the account- but the amount they earn is minimal compared to a traditional credit card.
Prepaid credit cards are beginning to make their mark in the corporate world, however. Companies are branding the cards with their logos, and using them as employee incentives since they’re cheaper than checks or merchandise incentives, and sometimes a prepaid card is used in lieu of a paycheck. The employee’s pay is loaded directly onto a prepaid card each pay period, and the employee can then use the money as they normally would. (Prepaid credit cards work in ATM’s for cash withdrawals, too).
Some advocates claim giving teenagers a prepaid credit card gives the opportunity to teach them responsible money management skills, while critics argue that we’re just showing them how tempting a real credit card can be and setting them up for disaster.
As far as the financial companies are concerned, it’s difficult to make much money on a prepaid credit card since they can’t charge interest on unpaid balances. They typically charge a sign up fee and then fees whenever a deposit is made to the account- but the amount they earn is minimal compared to a traditional credit card.
Prepaid credit cards are beginning to make their mark in the corporate world, however. Companies are branding the cards with their logos, and using them as employee incentives since they’re cheaper than checks or merchandise incentives, and sometimes a prepaid card is used in lieu of a paycheck. The employee’s pay is loaded directly onto a prepaid card each pay period, and the employee can then use the money as they normally would. (Prepaid credit cards work in ATM’s for cash withdrawals, too).
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