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Debt Counseling Assistance :: Reloadable Credit Cards
Reloadable Credit Cards:
Reloadable and Prepaid Credit Cards - a Good Choice for Teens?
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Reloadable credit cards may seem like the perfect choice for teenagers - they allow them access to a flexible credit card, an opportunity to make purchases online, an understanding of how payment cards work and a chance to budget and spend their money.
However, they also come with a number of service charges and potentially dangerous opportunities.
To learn more about reloadable credit cards and whether they're right for your teen, keep reading.
Service Fees
Because there are no interest rates to charge, the companies issuing prepaid Visa or Mastercard credit cards need to make their money from service fees. Typically, there is an initial setup fee (can sometimes be close to $100) and then you may have to pay an extra service fee each time you load money on to the card.
Depending on the type of prepaid credit card, you may then have to pay a monthly or annual maintenance fee and/or be required to spend your balance within a specific time limit. The monthly fees usually range from $4.00 to $10.00 per month, depending on the card.
A Disconnection from Cash
Prepaid credit cards are designed to emulate the credit card purchasing experience. They may be convenient, but there's something to be said for the lessons learned when your child deals with hard and finite cash. They get to actually see their funds decreasing with every purchase and make that connection between spending and decreased savings.
Access to Inappropriate Content or Goods
While a reloadable Visa or MasterCard may seem like a great way for your teen to pay for gas or order items online, it can also be an easy way for them to gain access to explicit goods or materials.
The Internet is full of websites that not only sell pornographic content, but also pornographic goods and toys. The only requirement to access it? A credit card.
Before you put reloadable credit cards into your children's hands - make sure they're responsible enough to handle them and have built up a strong understanding of money and budgeting.
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