A credit card for your own children? What used to be unthinkable can make sense today – if you choose the right model. Prepaid credit cards are very suitable for teaching young people how to use cashless payment methods.
Properties and functionality of the prepaid credit card
Every prepaid credit card works on a credit basis. The addition “prepaid” stands for prepaid. Only when this type of card has been “loaded” with the intended amount of money will it become an active means of payment. In contrast to the classic credit card, “prepaid” has no credit line. Only the amount paid in advance is available for payments. An overdraft is therefore excluded.
The card is topped up free of charge by transfer from a reference account, for example the checking account preferred by the parents for control reasons. A Credit bureau exam usually does not take place when a prepaid credit card is set up. Many parents see this as an opportunity to introduce their children to cashless handling of money.
Due to the protection of minors, some credit card providers have included restrictions in their rechargeable cards, which are intended to prevent the purchase of services that fall under the protection of minors.
Children alone cannot apply for a prepaid credit card. This is only possible if accompanied and with the consent of the parents. An additional safeguard in the use of the means of payment is given by the fact that no credit can be taken out with a “prepaid”.
The prepaid credit card for children and schoolchildren
A credit card for your own child is initially rejected by most legal guardians. The fear of abuse and the risk of debt is too deep. Against the background of the increasing number of cashless payments, the banking industry has launched a prepaid credit card, which is essentially different from the conventional credit card. Only the previously “loaded” credit can be issued by the cardholder.
This makes prepaid credit cards interesting for parents who want to give their children a cashless payment method. The full cost control remains with the legal guardians.
But why are more and more parents giving their children prepaid credit cards? Here some examples:
1.) Online shopping on the Internet increasingly corresponds to normal consumer behavior among children and schoolchildren. In addition to the rather unpopular method of advance transfer, online shops also accept digital payment methods via PayPal , Paydirekt and credit card payments.
A major advantage of the prepaid credit card for purchases on the Internet is the limited availability framework. This also applies to internet fraud. The maximum damage can be at most the amount of the credit stored on the card. Since there is no credit line, as is usually granted for regular credit cards, this credit line cannot be “plundered” by fraudsters.
2.) Parents or guardians can easily top up the child’s weekly pocket money by transferring it from their own current account to their child’s card. The available pocket money can be used for consumption or saved by the child through any amount of pocket money per week.
3.) The benefits of a prepaid card for Filia & Filius can unfold in the best sense of the word on school trips or stays abroad. Parents can top up the card at any time. On-site withdrawals with the credit-based card are free of charge. This also applies abroad .
Payment can be made both online and in real goods purchases. Due to the density of the network worldwide, a card from Mastercard or Visa is recommended for children staying abroad. Cream bank and Sparkassen are also well represented nationwide.
There is a lot to be said for prepaid credit cards for children
As the areas of application briefly portrayed here show, there is much to be said for the use of a rechargeable credit card for the kids, which is meticulously managed and controlled by the parents.
Here are a few concise facts and advantages that speak in favor of using the prepaid credit card for children:
- Possibility of introducing cashless payment methods
- The prepaid card protects against loss of cash on school trips or on vacation
- The payment limit of “prepaid” in particular reduces risks when shopping online
- Parents retain cost control and can track bookings
- Prepaid cards as a sensible step towards responsible use of money and electronic means of payment by children
However, we advise against the prepaid offers available at petrol stations. Experience shows that cash withdrawals are often not possible with versions from the petrol station. However, fees for the respective top-up and top-up are often associated with costs.