A new prepaid debit card lets teens customize their plastic while parents keep an eye on every dollar spent.
“Today parents don’t know where kids are spending money if they give them cash,” said David Jones, chief executive officer of PAYjr, a Web site that aims to help parents teach their teenagers financial responsibility.
Joining the prepaid card market, PAYjr has partnered with the Visa Buxx program to offer a reloadable, prepaid PAYjr Visa Buxx card that parents can load, monitor and cancel at any time.
Prepaid cards, which allow parents to give teens a finite amount of money to spend, are gaining popularity as banks and credit-card companies across the country begin offering them.
The cards aim to improve levels of financial literacy. The average grade on a personal-finance test given to high school students by the Jump Start Coalition for Personal Financial Literacy last year was 52.4 percent — a failing grade.
“What we’ve learned is that people in general and young people in particular don’t know enough about personal finance,” said Laura Levine, JumpStart’s executive director.
The purpose of PAYjr is to encourage families to teach financial responsibility before students enter college, Mr. Jones said.
“I think many young people are becoming adults, becoming consumers and not knowing enough about personal finance to make smart decisions,” Mrs. Levine said.
Visa Buxx cards were created in 2000 and are now available through five additional major providers, including Sandy Spring Bank and Wachovia bank. One of the major components of the Visa Buxx program is the ability for a parent to monitor and control a child’s spending, said Visa spokesman Jason Alderman.
Though the PAYjr Visa Buxx cards have been offered since November 2006, PAYjr yesterday began selling a “design-your-own-card” program in which teens can customize the appearance of their card by uploading photos, drawings or other images to the PAYjr Web site.
The PAYjr card is available for youths 13 years and older. The card initially costs $4.95 for a stock design or $12.95 for a custom design and has a monthly fee of $3.95 and a 50-cent fee each time the card is reloaded.
Its Web site provides a free online chore- and allowance-tracking system that can work in conjunction with the card.
Mr. Jones said it is important for teens to learn to use “pieces of plastic” the right way and that teens who do not learn financial responsibility early may end up facing credit card debt later in life.
Mrs. Levine said parents should couple the prepaid cards with conversations about personal finance.
“The caution that I give to parents is just giving your child a prepaid card does not teach your child all they need to do to use a credit card later.”