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The Best and Worst Prepaid Debit Cards for Teenagers

justin bieber

When it comes to teens and money, many parents struggle with the process of teaching their children about how to responsibly use credit and debit cards. On the one hand, becoming comfortable with paying with plastic is an essential financial skill in our modern world. But on the other hand, many parents are concerned that turning their teens loose with a traditional credit or debit card will result in overdraft charges, debt, or other negative outcomes due their kids’ inexperience with these powerful financial tools.

To cope with this problem, parents are increasingly turning to the prepaid debit card industry. On the surface, prepaid debit cards seem like the perfect solution to the issue of teaching kids about using a card to pay for their purchases without exposing them to potential financial pitfalls: prepaid cards have the same “look” and “feel” as a debit or credit card issued by a bank, but they don’t provide the same opportunity to get swallowed by debt or send a checking account into the red.

However, many prepaid debit cards are costly because they carry so many fees. In fact, some carry fees so exorbitant that parents dismiss them entirely, choosing to just roll the dice on turning over a conventional credit or debit card to their teen.

It’s important to note that prepaid debit cards vary wildly when it comes to the fees they charge, so it’s important to consider all the cards on the market before choosing to go in another direction. Check out the information below for details about the best and worst prepaid debit cards for teens that are out there today:

Best Prepaid Card: Bluebird from American Express

American Express introduced its Bluebird prepaid debit card in collaboration with Walmart in 2012, and since that time it has received consistently good reviews. The primary reasons for the positive feedback on this card stem from the low fees carried by the card and the transparency American Express has shown in explaining its fee structure to consumers. In fact, the Bluebird card is fee-free in many areas that other prepaid cards aren’t. For example:

  • You can avoid surcharges at MoneyPass ATMs; many cards don’t have an ATM network, so you’re subject to an owner’s fee of $2 or more every time you withdraw money or check your balance.
  • There’s no monthly fee; comparable cards charge between $3 and $8 per month
  • There’s no fee to load cash onto the card at Walmart; most prepaid cards require you to pay $3-5 for a cash load pack.

In short, the Amex Bluebird card provides a number of great services for a fraction of the cost of other prepaid cards out there today. If you’re more comfortable with your teen learning about plastic with a prepaid card, this is probably the one to pick.

Worst Prepaid Card: SpendSmart Justin Bieber Card

In late 2012 Justin Bieber announced a partnership with BillMyParents to offer a prepaid debit card specifically marketed to teens. The card was immediately viewed with suspicion – after all, celebrity-endorsed banking products have a dubious history – and the skepticism was warranted.

Bieber’s card is one of the more confusing cards on the market; the fees are easily understood and many can be avoided, but there’s a lot to remember and keep track of in order to do so, and we all know that organization is not most teens’ strong suit. Also, compared to the Bluebird, the number of fees charged by the Bieber card are borderline outrageous:

  • There are fees to load money onto the card ($.75 to load from a bank account, $2.95 to load from a credit or debit card)
  • There are fees to withdraw money from an ATM ($1.50) and to do an ATM balance inquiry ($.50)
  • There’s a $7.95 replacement card fee
  • There’s a $3 fee for 90 days of inactivity
  • There’s a $3.95 monthly fee

Of course, as long as the card is used consistently and is never lost or stolen, two of those fees are easily avoided. But teens are notorious for losing and forgetting things, so it’s clear that the Bieber card is seeking to exploit these two weaknesses in its customer base. In short, if you’re shopping for a prepaid card for your teen, pass on the Biebs this time.

The bottom line: prepaid cards are often a good choice when it comes to teaching teens about paying with plastic, but be sure to do your research and shop around for just the right card in order to avoid getting slammed with unnecessary fees.

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  • Elisabeth Donati

    It’s so much better to teach kids just to use cash!

    • John B Fraser

      This article doesn’t suggest that kids shouldn’t learn how to use cash but if you have bought anything in the last 10 years you would realize that more and more purchases happen with electronic transactions and regardless of what Elisabeth thinks…that is not going to change and you need to teach your kids how manage money electronically.

      Have them carry some cash on them then have them carry a debit card. Teach them to spend only what they have and allow them to manage their money via an online portal.

      • Elisabeth Donati

        Let me be more specific…I’m completely against giving kids the use of a prepaid credit card because it’s not their own money.

        Whether it’s cash, a debit card tied to their own checking account or a paypal account connected to their own checking account, the point is that they need to manage THEIR money.

        Putting $500 or $1000 into a prepaid card and is just teaching how to use credit cards and other people’s money instead of their own. THIS is what gets them into trouble.

        Even if they master paying off the balance each month on the prepaid, there is no guarantee that this behavior will follow through with an unsecured card with a much higher balance, let’s say $10,000.

        • John B Fraser

          I’m not sure if you understand how a prepaid card works. If my daughter takes $80 from her savings and puts it on her card that money is deducted from her savings account immediately.

          Your original comment said you thought it was much better to teach them to use cash then your latest comment contradicts it then misstates how a prepaid card works. If my daughter takes baby sitting money and puts it in a card or puts it into cash form, what exactly is the difference?

          • Elisabeth Donati

            I added that I think debit cards are fine because they are our money, not someone else’s money (or potentially someone else’s).

            If your daughter takes $50 and puts it into her checking account and uses a debit card, she’s managing her own money.

            Why put $50 on a prepaid card with fees when she can put it in her own checking account and just use the money.

            Proponents talk about the benefits…

            1) you can’t put your checking account in the red. You can’t do this anyway. If you don’t have the money in your checking account, your debit card won’t work.

            2) teaches kids to use credit cards wisely. No it doesn’t. They are spending their own money or the money someone (often parents) gave them and loaded the card with.

            I’m sure there are some good uses for a prepaid card, for example, for people who don’t have bank account this could be a great alternative which enables them to pay for things online or rent cars or make airline purchases, etc.

            I’m going to stick with my original comment that having a child function with cash only to get the emotional feeling of having no money in their wallet when they don’t manage their cash well. THEN switching over or adding their own debit card is the next step, especially when parents or guardians are teaching them good money habits (like writing expenses in a checkbook register).

        • Brittany

          acctually if you put them on a american express bluebird FAMILY account they can load as they please but only you can take out money from both your account and theirs, they can only take what they earn from their account not yours. This card teaches them what it is like to have money in the account but if spent un-wisely like cash they will run out and the account no longer charges any other transactions, hints NO overdraft fees. These accounts have absolutly NO fees what so ever. Credit cards YOU have teach not anyone or anything else.
          If you see they spend their money wisely then allow them to give a credit card a try and always remind them of what could happen if they don’t pay what they barrow, prepaid cards are truely in my opinion ment to help you in this case help them.