Prepaid debit cards are the new celebrity fragrance.
In the past two years, we’ve seen stars like the Kardashian sisters, Suze Orman, Russel Simmons, and George Lopez all plaster their faces on plastic.
For the most part, even their famous mugs weren’t enough to win over personal finance critics, who have widely panned prepaid debit cards for their bevy of hidden usage fees.
Teen pop sensation Justin Bieber most recently tapped into the industry. He’s earning $3.75 million to market Bill My Parents‘ new SpendSmart Card, which targets tweens.
When we first reviewed the card in January, we were pleasantly surprised to find it wasn’t as bad as we feared. In fact, for parents willing to take a gamble on prepaid debit cards to teach their kids how to manage money, it may have a lot to offer.
Here’s the main reason why:
Yes, there are fees. But they actually pay for something.
Like all prepaid debit cards, Bieber’s SpendSmart card comes with its fair share of fees –– including a $3.95 monthly usage fee, a $1.50 ATM fee, and a $7.95 replacement fee, to name a few.
But unlike other cards, which are basically charging you for the privilege of letting them store your cash, parents are actually getting something in return here.
The card not only lets parents get text alerts every time their kid swipes their card, but they can also set up recurring deposits to the account, track their spending from their smartphone, lock and unlock the card whenever they want, and block the card from working at certain retailers (say, a liquor store or bar).
This card could certainly be a useful tool for parents looking to teach their kids to manage money, especially if they don’t quite trust them to handle their own bank account yet.
That being said, it’s always wise to exhaust all of your other options first. Try a web tool like Tykoon, perhaps. For free, it lets you track your child’s allowance and makes sure kids save and donate a portion of their earnings each month.
And, of course, there’s always the safest route of all –– opening an actual checking or savings account on your kid’s behalf and coaching them on your own.