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Revolutionizing a Child’s Allowance and Money Distribution

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This article was last updated Oct 09, 2017, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

If you’re like most parents with children, you know the end of the week is the time for allowance. Your little ones were responsible with their chores and cleaned the dishes, took out the trash, made their bed, and even made it to the bus on time. You hand over 5 one dollar bills to your 5 year old or 10 one dollar bills to your 10 year old (that’s the common practice, right; $1 per child’s age?). Parents need to start altering how they think about distributing allowance money and paying for their child’s needs when they aren’t around, such as at school functions. Here are the reasons why.

The Problem with Past Allowance Distribution

Children are careless when it comes to money – think about it. 18519583_sWhat consequences do children really face if they misplace or lose their money? They might not get that new toy they had been saving up for, but they can get it next week. Or the child may not be able to pay for lunch, but Mom’s got your back – “here’s five more dollars sweetie.”

What about theft? In 2011, 85% of public schools reported violence, theft or other crimes as taking place in their school.¹ Children aged 12-17 are far more likely to be victims of property crimes than adults, mostly occurring on school grounds.² Your child’s school bully is getting enough lunch money to buy the toy your child’s been eying for the past 2 months.

What if your child paid for their lunch with a prepaid debit card? Sure a bully can still steal your child’s prepaid card, but now you can cancel it on him or her or even remove the funds so the card is no longer able to make the transaction. What a thought!

Allowance… Revolutionized

Pre-paid credit cards are perfect for parents who want to monitor their child’s spending. You can set spending limits, set-up auto freeze if the card is charged too much in a certain time period and see exactly what your child is buying. To closely monitor their spending, you should only place enough money on the card for that week’s allowance and 16096220_mwhatever additional money they may need to get through the week. If they have any left over, you should place that amount into a savings account for them to have later.

Convenience is another bonus to using a prepaid card to load your child’s allowance onto. How many parents walk around with the exact amount of allowance money needed for each child? Not many. Loading money onto a prepaid card can literally be done online in 2 minutes from one account, to another.

Valuable life skills are also being developed early on with this method. Let your child see their transactions and understand how a prepaid card works.  They can see the fees associated with card use and begin to understand the terms and conditions of card use that they will be introduced to once they hit 18. Budgeting and monitoring their balance will set them up for success in the future. Just be sure to keep in mind that not all cards are created equal.

Which Card to Choose?

All credit cards come with fees attached to them, but prepaid cards have the reputation of charging more fees than traditional credit cards. But they’re not all bad; a projected $117 billion will be loaded onto prepaid cards in 2013 according to the Mercator Advisory Group. Today celebrities are seen endorsing credit cards of all kinds. The Kardashian’s had a prepaid “kard” that was short lived, probably because it charged $100 annually and an additional $8 per month. Justin Bieber also jumped on the prepaid endorsement train with the BillMyParents card. What a name, huh? The Bieber card will literally nickel and dime the card user.

My advice? Stick with better reputable credit cards that aren’t branded by a celebrity – they are more reasonable and affordable for the parent. Instead, consider these top prepaid cards for your child.


¹ National Center for Education Statistics

² National Crime Prevention Council

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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