It’s true: Kids need to learn about how to manage their money, and teens need to learn how to properly use plastic. When was the last time you counted bills out to a cashier to pay for something? You really expect your teens to function well in a mostly-cashless society without practice with plastic?
So, while teaching teens to manage their money with the help of plastic is probably important, the next issue is whether or not a prepaid debit card  is a good idea. And, on top of that, you need to ask yourself whether or not a prepaid debit card endorsed by a celebrity a good idea.
Justin Bieber Gets Into the Prepaid Debit Card Game
Many celebrities, from Suze Orman  to Russell Simmons, have begun endorsing pre-paid debit cards. Even Magic Johnson shills for pre-paid debit. (The Kardashian version was laughed into oblivion, however.) Now teen heart-throb Justin Bieber is getting in on act. He’s endorsing the SpendSmart prepaid debit card, and doing it under the guise of presenting helpful money lessons for teens.
I’m conflicted about this because, on the one hand, some of the stuff the Biebs is saying in his promotions (“[I]f you have $100 or $100 million, if you spend more than you have, you’re going to go broke”) makes sense. And, let’s face it, your kids are more likely to listen to Justin Bieber tell them about money than they are to listen to you tell them about money.
Where things get sketchy, though, is when you start realizing that the idea of having your teens learn about savvy money choices by paying the fees associated with a prepaid debit just doesn’t make sense. One of the lessons teens learn from prepaid debit cards  like the Justin-Bieber-endorsed SpendSmart prepaid debit card is that you should be paying to access your own money.
That’s not a lesson I’m too keen on teaching my son.
SpendSmart Comes with Fees
Of course, the card that Justin Bieber approves comes with fees. Most prepaid cards do. Here are some of the fees you can expect to pay with the SpendSmart prepaid debit card:
- Monthly fee: $3.95
- Loading fee: $2.95 from credit card, $0.75 from checking account. You can make a single automatic payment each month from a checking account fee-free.
- ATM fee: $1.50 + ATM surcharges
- ATM balance inquiry fee: $0.50
- Inactivity fee: $3 after 30 days of inactivity
While you can avoid some of these fees with careful planning, you are, at minimum, going to be paying $47.40 per year because of monthly fees.
So, how about this: Why not open a joint checking account with your teen? In some states, and at some banks, it’s possible for a 14-year-old or a 16-year-old to get a prepaid debit card. You can still monitor and control your teen’s spending, but you don’t have to pay the fees. And if you want to avoid issues related to overdrawing the account, just be sure not to opt-in to standard overdraft protection. That way, your teen will be denied at the point-of-sale if there are insufficient funds in the account.
What do you think? Are there ways other than fee-laden prepaid debit cards to help your teen learn to manage money?
Image: Oh-Barcelona.com