Our PASS Card Experience, Part One: What I Hope We Get From This Experience
This is a sponsored post written on behalf of American Express and the new PASS Card for teenagers.
My 17-year-old stepdaughter has learned a lot about money this past year.
She got her first job at McDonald's, began working 30 hours per week, and started earning some serious cash. From the start, she's been good about saving half of her earnings each paycheck-- and that really came in handy when she totaled her car a few days before school let out for the summer. Don't worry, she was fine- The car was so old that it didn't take much to total it!
She has spent the summer working and saving up to buy herself another car and I think the experience has done more to teach her about the value of a dollar than anything. Saving for a car isn't easy. Having a job without a car isn't easy. We (along with her boyfriend) were able to provide rides to and from work most of the time, but there were occasions when she had to walk the three miles to work or walk home, which definitely wasn't fun.
On Friday, the day after her first day of school, she wrote a check from her bank account and paid for her new (to her) car. I was so proud of her for saving up the money and making it happen. As she enters her senior year, I think she's right where she needs to be in terms of learning how to handle her finances.
That's why I was excited when American Express offered me the opportunity to get my stepdaughter a PASS card and write about the experience.
A PASS card is a new prepaid, reloadable card that American Express has created just for teens. It's safer for teenagers to carry around than cash and since they can only spend the amount that's been loaded on the card, it's a much better idea for them than a credit or debit card.
My 17-year-old has her own bank account with money she's saved from her job. However, we want her to be responsible with our money as well as her own, so we've opted to load her card each week with enough money for her to buy a tank of gas and a week's worth of any grocery items she might want for herself. While we try to eat dinner together as a family as often as possible, my 17-year-old has a busy extracurricular, social and job schedule, so it's a good lesson for her to make sure she has food on hand that she can prepare for herself when she comes in after dinner.
For the next two months, I'm going to be checking in with you weekly and letting you know how our PASS card experience is going. We are sitting down with my stepdaughter tomorrow evening and explaining the PASS card to her, and I'm eager to find out how she does with it. Some things I like about the PASS card right off the bat:
- If the card is lost or stolen, we aren't responsible for fraudulent charges, and American Express replaces the funds. I don't know about your teens, but ours lose things ALL THE TIME!
- My stepdaughter can't charge any more on the card than what's in the account, so we don't have to worry about her spending too much or creating overdraft charges.
- Both my husband and I and my stepdaughter can log into our PASS card account and monitor how the card is being used.
Until next time, I'd love to know how some of you are helping your kids budget money. Do you allow them to have their own debit or credit card, or do you make them carry cash? Are there any pitfalls of these options that you'd like to avoid? Let me know in the comments!
Labels: PASS Card
23 Comments:
Our son is 19 and about to start his sophomore year at college. He has had his own account with a debit card since he got his first job in jr. high. He has done amazing handling his money, never allowing his account to get below a certain level that he determined himself. The bank manager who helped us set up his account spoke amazing wisdom to him about managing. My husband and I told him the same thing, but he really listened more intently to someone other than us. Isn't that the way it is with our teenagers? The PASS card sounds like a great idea. I sure could have used it when I was in college!
Me too, Patty- I paid more than my share of overdraft charges for the first few years after I got a debit card in college! I love that the PASS card lets kids manage their money without being able to do too much damage!!
Thanks for sharing!
Once our kids started with jobs and making a regular paycheck, we taught them how to budget their money. They would each keep a notebook type account book with a page for each budget item. When their check was deposited in the bank, they would take whatever cash they allotted themselves for spending money, and divide the rest into the appropriate account. (Tithe, savings, gas for cars, car insurance, clothing, college expense, gifts, etc.) When an expenditure was made, they would log it into their book, helping them to see how much they still had in each account. My children have all expressed their gratitude for teaching them how to be responsible with their money. When they went off to college, they saw how unprepared most of their friends were to deal with their finances. I think that is such an important life skill for everyone to learn!
I love the idea of having your child keep a notebook, Sandy- That's so much better than starting out with the little bankbook. That way, they know exactly where their money is going- GENIUS!
I agree that most kids are unprepared to handle their finances when they go to college. I know our 19-year-old was. I'm hoping that this time around, things will be different.
Both of my teenage sons have high school accounts at Chase. They have Visa debit cards that can't be overdrawn--so no overdraft fees; no monthly fees, either. I can deposit or withdraw money from their accounts at anytime, online or with my own card at the ATM. They also each got $50 bonus for opening the accounts. Other banks may have similar accounts available.
Does it help them build credit? That's the main reason I had a credit/debit card early - so I could build credit. I was always responsible for paying ALL of it off and I never had a problem with it.
I don't know, Mandy- I'll ask and let you know. That's an interesting question.
I like the article. I feel like I have failed in that area (money/budgeting). My ? is about a comment you made about letting your s.daughter buy some food for those times she can't be home for dinner. I wanted to do something like this for my teenage daughter -except I would just stock the fridge/freezer with stuff she could fix quickly. The only things I could come up with, though, is JUNK. Hot pockets, froz. pizza, stuff that I realize teenagers love, but they are so fatty and full of preservatives. Now and then would be OK, but we are probably talking 3-4 times per week that she will need to fend for herself. Any ideas?
-Tara
Tara, I would just talk with her about it and come up with a list of healthy foods she loves. Then only stock up on those- If there are no Hot Pockets around, she can't eat them, right?
I definitely buy my share of Hot Pockets for my stepdaughters, but I also try to make a little extra of dinner most nights so that there are leftovers for them in the fridge. Those tend to get eaten up by them immediately! We also have been buying fixings for wraps for them- whole grain wraps, Boar's Head turkey, lettuce, wasabi mayonnaise, etc, and they both LOVE them.
Good luck!
Freezer cooking!! You can make lots of healthy meals for your freezer (I do it all the time so I don't have to cook every week night.) Just package them on an individual level (quart-sized bags are great and they thaw faster!) and she can grab them and heat them up whenever! Here are some recipes: http://organizedhome.com/freezer-cooking/freezer-cookbook-recipes?page=2 http://www.momsbudget.com/freezerrecipes/index.html But there are a million more if you google freezer cooking.
Oh, another thing I do is package clean, peeled, chopped fruits and vegetables in snack sized bags. It's just about the only way we'll eat produce (other than when I cook with it) since it's too daunting to peel and chop carrots when you're trying to get out the door. My husband will grab a little bag of grapes on the way out the door, but he wouldn't touch the big package of them. It requires some extra work, but it's not so bad if you do it as soon as you get home from the grocery store before you put things away. (I also like to keep hummus around for my little bags of carrots. Awesomeness.)
This'll be interesting! I tend to think that there's no 'magic bullet' around all of this, but that any of the approaches that require the sticky conversations and realizations about the reality of budgeting have tended to work out well for families I know. (Mainly - no $ means no $, even if your credit limit can help you pretend otherwise, and ignoring your balance doesn't make it magically grow (or shrink, when it comes to CCs.))
The credit history question is a good one - having seen my brother get shocked when he realized that his years of using a debit card and paying rent weren't enough to create a credit history, this is another of the 'life skills' that I think can slip through the cracks for many of us!
Great idea. My daughter is not at this stage yet, but I have two nieces who need some help! The question about if it helps them build credit is an important one. Because how would this differ from setting up a bank account that you contribute to and she uses the ATM? And also, does it cost money to do this? The problem with most pre-loaded cards is the fees!
But this topic is so super important! Young people need more help learning about money so they don't wind up with credit problems!
I asked my contact at American Express your questions about whether the PASS card establishes credit. Here's the answer:
"Because PASS is prepaid, it doesn't affect the teen's credit history and is a safe alternative to credit and debit cards. However, American Express offers many different products for different needs. For example, American Express Cardmembers can add Additional Cards with Custom Limits to their current AmEx account and set a spending limit, which allows the teen or young adult, 18 or older, to positively establish or build a credit history.
Another good resource for families is Money Night Talk . American Express last week announced a new partnership with Jean Chatzky to launch the "National Money Night Talk,” a program culminating on September 16, which encourages families around the country to talk with their children about money and financial responsibility. The site includes free online resources for parents of kids in three age groups – middle school, high school and college. Each segment focuses on the topics that parents and kids said are most important to them at that age – saving, living within a budget and the value of money.
Hmm. Sounds like a good reason to get a checking account with a debit card and a line of credit (to avoid large overdraft fees or penalties on your credit score) for your teen instead of the PASS card. Otherwise, you might as well hand them cash.
I really appreciated coming out of high school and college with a really well-established credit line. And because my parents' taught me how to manage money, it was a good credit score as well.
With the new rules that took effect on Aug 15th, you cannot overdraft a checking account with a debit card unless you've given the bank prior permission. So you don't need an overdraft account--the purchase will be refused if there's not enough money in the account. This is perfect for teens, and this is how my sons' accounts were set up before the rule took place. Fortunately, they've never had a purchase refused since they keep close tabs on their balances.
Debit cards/ checking accounts are not part of credit history. If however, you abuse your account, the bank can close it and report you to an organization that keeps track of this stuff (I think it's called Chex systems). This can make it very hard to open an account at any bank.
That's probably good. I suppose a credit card with a low credit limit would work too. I always had one.
LOL, Mandy, give it a few weeks before you decide whether PASS is a good idea or not!
I've got seven more weeks of writing about our experience, FYI! ;D
I'm excited about it, too. Having been through this debit/credit experience once already with our eldest, I'm already seeing benefits to the PASS card- but I'll get into those in some upcoming posts.
And Marsha, thanks for the info.
I love the idea of a debit card- The problem with having only a debit card for teens (particularly those away at college) is that they need to have something for emergencies, like if they need a tow or a car repair. Sure, you can transfer money into your child's account, but that takes a day or two to take effect.
I'll get into this aspect of PASS in a future post, because it's definitely one that sells me on PASS as opposed to other money options.
Well, to be fair, I don't have any kids, and I really don't have any teenagers, so I'm not really the best judge of whether PASS is a good idea. :)
Lindsay,
With our Chase debit cards, I can transfer money online into either boy's account and it is available immediately. Of course, this is when I'm transferring money directly from my Chase account into their Chase account. I can also deposit cash at an ATM into their accounts and they can withdraw it immediately, even at a remote location.
You can also set up an automatic transfer on a periodic basis. I give my boys an allowance that they use to pay for some of their needs and wants, so I just have a certain amount transferred every two weeks.
I don't want to sound like a spokesperson for Chase, because I'm sure other banks have similar programs. This setup just seems perfect for my teenage sons as they complete high school and go on to college.
Not a parent, but only 23 and the BEST thing for me to learn how to handle my money is... Dave Ramsey's Financial Peace University plan. It really is awesome.
I know SO MANY people who swear by Financial Peace University! :)
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