In contrast to the classic credit card, money must first be deposited here, which can then be spent. They are attractive for parents who want to enable their children to make cashless payments and at the same time want to keep control. They are also interesting for people with a poor credit record rating or low or irregular earnings, since often in credit record information and no proof of a minimum income is required for these special cards. The card can be used to pay in shops and on the Internet. Cash can often also be withdrawn from the machine.
How much does a card cost?
According to an investigation by the magazine “Finanztest” (issue 11/2013), the costs differ greatly. Some cards are free, especially for minors. Other providers incur an annual fee of between 12 and 22 dollars . It can be expensive at the ATM: According to the test, fees for withdrawing cash were up to 7.50 dollars .
The consumer advice center in North Rhine-Westphalia criticizes that it is possible for some cards to slide into the red despite the limited credit. This can happen if a checking account is connected to the card. In online retail, for example, money is booked from the card, even if there is insufficient credit left, says Amabell Rino from the NRW consumer center. Depending on the provider, overdraft interest may also be due. The consumer advice center has warned some banks because they allow overdraft with hidden contractual clauses.
However, there are no compromises when it comes to security. In the “financial test” investigation, for which 15 cards suitable for young people were checked, prepaid cards have the same security level as classic credit cards.
What else should parents pay attention to?
Children can get their own credit card from the age of seven. From what age such a card makes sense, parents should think carefully. Rino advises not to start too early – cash is more suitable for learning how to use money. A credit card can be useful, for example, for emergencies when young people spend a long time abroad. Practical: In many cases, parents can track their child’s payments via SMS or email notifications.