Teaching Kids Money Basics Can Prevent Chronic Credit Card Use

Many parents are shocked to find credit card offers addressed to their children in the mail - yet they don't think twice about signing their kids up for prepaid debit cards.

Credit card companies are smartly marketing prepaid cards as an easy way for parents to teach teens about money. We load a certain amount of money onto the cards, and our kids have to figure out how to budget it. But here's what they don't tell us. Prepaid cards come with as many - or more - fees as regular credit cards, say Atlanta bankruptcy attorneys.

By signing your children up for plastic at a young age, you may be putting them on a path to future credit card debt. While their name contains the word "debit," prepaid debit cards are not the same as the debit cards tied to your bank account. Creditor-issued cards come with a slew of start-up and use costs, like activation fees, maintenance fees, fees for purchases and reloading -even dormancy fees. From the start, you're showing your kids that they need to pay to, well, pay.

Couple this with the fact that most children today learn about money by watching Mom and Dad pay for things with the "magic" credit card and it's no wonder that our kids have thousands of dollars of debt by their early 20s. We're teaching our kids how to spend like us, but where has our heavy reliance on credit cards gotten us? If we want to give them a fighting chance at responsible finances, we need to teach them how to make smart money choices.

Consider signing your kids up for a free savings or checking account with an ATM/debit card. If you put their allowance in the bank, instead of on a prepaid card, they will still have to budget it, but without the excessive fees - and with a better understanding of how their purchases affect their balance. Maybe after a while of paying cash, they won't be so keen on forking over a high interest rate when they finally do sign up for that credit card.

It's funny how society dictates the way we spend our money. We know that carrying credit card debt makes everything more expensive, but we do it anyway - and we unwittingly teach our kids to do it - because that's where everyone does. But that doesn't mean we can't change.

If you think you might have too much debt, why not try our new DebtStoppers Budget Challenge? Simply print out our basic family budget, plug in your numbers and see if they balance. If they don't, you'll be able to see exactly where things aren't adding up - so you can brainstorm some ideas for getting back in the black. And if you need help making it happen? Consider a free one-on-one debt analysis with one of our professional Atlanta bankruptcy attorneys.

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