By Matt Fernell, Editor-in-Chief at Finance.co.uk. Published 2nd November 2023.
A prepaid card for teenagers is a great way for parents or guardians to provide money for their children to spend.
You can open a prepaid card for children from the age of 6, which makes it a good way to start educating your child about money if they’re too young to open a current account.
Prepaid cards for teenagers usually come with parental controls and restrictions, giving you the power to manage specific options and ensure your child is safe and sensible with their money.
To get a prepaid card for your child, you can apply through the provider’s website. You usually need to download an app, and your card will be sent within ten days.
Your child can’t sign up for one of these cards themselves if they’re under 18. Instead, you will need to do this on behalf of your child.
To start using the card, you will need to load money onto it for your child to spend. There are several ways you can add money to their card, including:
Transferring money directly from your bank account
With cash via one of 28,000 PayPoints
Using your debit card through the card’s online account or app
By setting up a regular ‘pocket money’ payment
Once they have spent the money on the card and the balance is £0, they cannot spend any more until more money is added. This protects them against getting into debt and can help teach them how to budget.
You can use the app to monitor and manage the card. You’ll be able to view their balance, set restrictions, and manage any other features the card has. Some apps also provide tips and lessons on how your child can manage their money.
Prepaid cards for teenagers can be used in most places where a debit card is accepted. This includes restaurants, public transport, and retail stores.
These cards can also be used at cash points, meaning they can access cash if needed. There are some places where prepaid cards cannot be used, including gambling sites, casinos, off-licences, pubs, or any outlets designed for over 18s.
You can add parental controls to a prepaid card for teenagers and children. For example, if you’d prefer the card didn’t work online, you can set up the card to work on the high street only.
Prepaid cards for children and teens come with various features and controls that help you manage their spending.
You can help your child budget and control their spending by setting spending limits. This can be set in a variety of ways; for example, you could set a daily spending limit of £20 or a monthly limit of £100.
Alternatively, you can limit where they can spend the money on the card. Some providers let you block certain shops and retailers, so your child won’t be able to spend with them.
You can limit how much they use the card to spend online or withdraw from a cash machine. It’s also possible to turn these facilities off so they can’t use the card online or at an ATM.
Some cards allow you to set up a series of spending pots or ‘jars’ to help your child budget and manage their spending.
For example, you can set up a pot for travel and allocate a certain amount of money to it. This then gives them a clear budget for what they can spend on travel expenses.
You can even limit how the money can be spent in each pot with some cards; for example, the travel pot can only be used on public transport or Uber. You can set up pots for anything, including food, clothing, and savings.
Some cards allow you to link the payment of pocket money with completing tasks or chores.
You can set your child a series of jobs on the app, like cleaning the car, and once it has been completed, a payment will be made to the card.
Most cards will provide you with real-time alerts and notifications every time your child uses their card to make a payment. This way, you can monitor their spending and be immediately alerted if the card is declined.
Some cards provide financial education through their apps that your child can use to learn more about money.
The lessons are designed to teach them budgeting skills and are tailored to their age. You can even set rewards for every time they complete a lesson, for example, adding a certain amount to the card for each level they pass.
There are several fees associated with prepaid cards for kids. The fees that you can expect to pay when taking out a prepaid card for teenagers include:
When ordering a prepaid card for teenagers, you will likely pay a delivery fee. This can be up to £5; however, some card providers won’t charge for delivery, so it’s worth shopping around.
Most cards will come with an annual fee. These fees can be paid monthly or annually, depending on your preference. Fees typically range from £1-£3 a month, which can be as much as £36 a year.
There are prepaid cards for teenagers that don’t have monthly fees, although these cards usually have fewer parental controls and features.
Some prepaid card providers may offer a free trial for one to six months. This can be a useful way to see if the card works for you and your child before you spend any money.
Prepaid cards for teenagers can also charge a fee for withdrawing cash from a cash machine. This can be charged as a flat fee of around 50p per withdrawal or as a percentage of the amount withdrawn, e.g. 1%.
A fee will likely be added to all transactions if a prepaid debit card for teens is used overseas. If you want to use a prepaid card when travelling abroad, consider a prepaid travel card instead.
Prepaid cards for teenagers and children are not linked to a current account. There are multiple differences between a prepaid card and children’s current accounts.
A children’s current account is an account with a bank or building society where children over 16 can manage their day-to-day spending.
With a children's current account, over 16s can set up direct debits and receive their salary from a job into their account. This isn’t possible with a prepaid card; the only way to add money is for a parent to deposit money onto the card.
The age required to open a current account is greater than that needed for a child to use a prepaid debit card. To open a child's current account, they need to be at least 11 years old.
A parent or guardian will need to open an account on their behalf if the child is under 16. To get a prepaid card, the minimum age for a child to use it can be as low as six years old, depending on the provider.
A child's current account is free to open and use, whereas a prepaid card can cost money to open and maintain. There are also fees associated with prepaid cards, including cash withdrawal fees overseas spending fees, and some providers will charge a fee just for having the card each month.
Some current accounts for children also earn interest over time. You’re unable to earn interest on the money paid onto a prepaid card for teenagers or children.
When choosing the best prepaid cards for teens, you need to consider the card's suitability for your child.
If you want a prepaid card for teenagers to help educate your child about managing their money, then a card with spending limits and lessons within the app is a good option. Cards like these tend to come with more fees.
If you want to create a place to store pocket money or allowances, a card with fewer parental controls and fees might suit you better.
You’ll also need to consider if the card can be used at a cash point, the withdrawal limit, the maximum amount of money you can load onto the card and the spending limits.
Some banks and providers will only allow you to get a prepaid card if you already have a current account with the same bank. This can limit your choices, so it’s essential to check when you’re researching the right prepaid card for your child.
The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.
