Photo by David Shankbone @ Flickr
If they didn’t know by now, the recent release and immediate termination of the Kardashian Kard reminded consumers that their children aren’t safe when it comes to money. No matter how diligent you may be in personal finance, retail businesses will find a way into your wallet, even if it means going through your kids.
While credit cards and prepaid charge cards could be useful tools in teaching your children to be financially responsible, the absolute failure of the Kardashian Kard does tip the hand of banks aiming to push unreasonable fees onto impressionable adolescents and unsuspecting parents.
Kardashian Kard Canceled
The excessive fees of the Kardashian Kard caught the wrath of many sensible consumers, but it isn’t alone in the plastic space. Other cards with popular branding such as Twilight, trendy music artists and designers like Paul Frank have already flooded the market.
These cards all cost a monthly membership fee to maintain in addition to a one-time activation fee and additional costs to “reload” the account with more funds. In most cases, parents will be left to handle the financial consequences while their children get to flash their favorite celebrities when making purchases.
Is Marketing to Children Fair?
As most parents know, children are expensive enough just to provide for, let alone adding costs of discretionary expenses like toys and entertainment. Every holiday, there is a “must have” toy or movie that breaks a new record for sales.
Children are a prime demographic market for businesses because most don’t fully understand the concept of wasting money and in lieu of cash, they have what is known as the “Nag Factor” or “Pester Power.”
According to a 2007 report by CBS News, about $17 billion is spent annually on advertising towards children, Furthermore, children ages 8 to 12 years old spend $30 billion of their own money each year and influence another $150 billion of their parents’ spending. How do kids that young have $30 billion to spend collectively in the first place?
Parental Guidance for Charge Cards
If managed right, however, prepaid charge cards can be used effectively to help parents keep tabs on their children’s finances as well as teach them to be responsible with money. Despite the costs, there are some benefits to giving your children prepaid charge cards:
- Convenience: Kids can make purchases online or in situations where a credit card is needed and cash won’t work. This will also get them accustomed to the concept of using credit and debit cards for transactions, though this may or may not be a good thing.
- Track Spending: While cash spending doesn’t leave much of a paper trail, parents can get a detailed spending report of what their kids bought if they used plastic.
- Financial Management: Another benefit of detailed reports is that parents and children have firm numbers to work around for a monthly budget or allowance.
While kids may be drawn to the face and branding on the cards, parents should be more diligent in their research before agreeing to open any new accounts. Often times, you can find more cost efficient options if you’re willing to bypass the superficial aspect of signature brand cards.
You could open a junior checking and savings account for your child that allows the debit card to be used like a credit card. Other options include co-signing for a low credit card limit or adding your child on as an authorized user for your card.
Obviously, each route carries its own advantages and disadvantages. Take the time to do the research, because a few hours of going over card terms and strategies can result in a life time of successful financial management for you and your children.
