January 9 Two of the biggest names in the credit card business are helping put plastic in the hands of teenagers. The new kind of card isn't a credit card though, but something called a reloadable payment card that functions a lot like an electronic allowance. Reloadable payment cards are offered on-line. VisaBuxx, M2 and PocketCard are affiliated with Visa and the CobaltCard is backed by American Express. The cards are being offered to kids as young as 13.
Parents control how much money is in the account.
And, in theory, your teen shouldn't be able to spend more. But, consumer reports spotted a potential loophole. They found that if a merchant does not ask for authorization for small purchases, multiple charges could exceed the limit. But, there are fees and they can add up in a hurry. On a positive note, the cards can be helpful if you need to get cash to your kids in a hurry or an emergency.