Our PASS Card experience, Part Three: Reducing Your Teen's Temptation to Overspend
This is a sponsored post written on behalf of American Express and the new PASS Card for teenagers. Our 17-year-old is using the card right now and I'm writing about our experiences. You can read Parts One and Two here.My 19-year-old has a copy of our credit card in her name. This has always been a bit worrisome to me, since she has a ways to go when it comes to money.
We gave her the card when she went off to college because we knew that she'd have certain expenses (like her car breaking down or a need for a small microwave, for example) that would go beyond her meager school budget.
However, that card has brought with it a host of small problems.
There was the time when she used our card to fill up her gas tank three times in one week, even though she lives on campus.
Hmm.
There were the times when she used our card to buy iTunes without telling us.
There was the time over the summer when I was in New York City and received a call from my husband that I couldn't use my credit card anymore because our 19-year-old had lost hers.
Ummm. TRAVELING.
These are just a few reasons why I'm really enjoying having a PASS card for my 17-year-old. We preload it each week with a set amount of money and she can't go beyond that limit. Period. We can also check her account transactions online, and so can she.
She's had it for a few weeks now. I just checked her balance and it's at $0.00. Obviously, I'd prefer for her to always have at least a few dollars on the card, however this is her budgeting lesson and she's got to learn it on her own.
I'm just thankful (from past experience) that she can never go over her weekly $50 limit. That's huge, y'all. You can have the best teenager in the world and still end up with a large(ish) bill on your credit card that you weren't expecting if you give your child a copy of your card.
The PASS card protects our 17-year-old from spending too much- and it protects our own budget as well.
In fact, I'm reminded now of a good friend of mine who in college had a little too much to drink and ended up using her father's credit card to buy everyone in the (packed) bar a round. The bill was in the thousands!
A PASS card sure would have come in handy there...
This week, I want to know about your experiences in this department. Did you ever charge too much on your parents' card when you were a kid? Have your teens ever done this to you? With all these stories in mind, are you leery of giving your teen a copy of your credit card now?
Tell me about it!
Also, for tips on having The (Money) Talk with your kids, check out www.moneynighttalk.com. That's where financial expert Jean Chatzky will be hosting a National Money Night Talk on the evening of September 16th. She'll give you the tools you need to talk about finances with your kids-- She'll even give you the words to say in the event that you're feeling particularly lost! I think this is a fantastic idea. Some of you have told me over the past few weeks that your parents never had the money talk with you and your finances have suffered over the years as a result. Put September 16th on your calendar-- It's a great, specific way to make sure that Money Talk actually happens.
Labels: PASS Card
13 Comments:
OMG, ya'll are WAY braver than me. I would not give any teenager my credit card. I give my kids an allowance in cash and it is up to them to manage it. Once they get a job (which I think should happen at 16), the allowance stops. I use a general guideline of $1/week/age. So my 11 year old gets $20/payday, which is twice a month for me. He will go up to $25/payday on his next birthday. Also, he either has to pack his lunch or use his own money to buy. (part of the deal is that I have to keep lunch stuff on hand) My 23 year old is showing every sign of being an excellent money manager now that she is on her own so I think it is a good plan for our family. I did pay her car insurance (on the car she paid for) and cell phone bill while she was in school but I required that she stay on principals/deans list to continue that arrangement. And she had to pay for any extras on the cell phone after an unpleasant experience with overage charges. I can be a hardass about money but oh well. Life lessons are harder.
I just read all three entries - somehow I missed them originally. I thought I'd share my experiences and that of my college junior son.
Me...
My parents didn't even HAVE a credit card until they were in their 60s and went on vacation in Ireland in 1986!!
I had a workstudy job in college and I put money in the bank every week. 3 girls in college at the same time didn't allow for handouts. I got my first credit card (American Express!) in 1980 right after I graduated from college. Only company that gave me a card. Still have the same one today.
I have overspent on a card in the past - $500 limit and I was over in the 1st month. My boyfriend, soon to be husband, was a bad, bad influence. It opened my eyes and I got us on the right track quickly.
My son...
Opened up a checking account that has a debit card when he went to college 2 years ago (he's only a 1/2 hr away living there). He has a savings account linked to it and he was overdrawn a couple of times. His statements come here and I confess, I open them. Sue me. However, he has a job at school, year round so he has his own income, now cut into a little more because he lives off campus. He's required to put something in savings. He hasn't overdrawn in over 2 years. I pay his cellphone (family plan), car insurance, and he has one of our gas cards. I NEVER handed out money free and clear when he was growing up so he knows the value of a dollar.
But no credit card for him til he's 21 because the rule is now a parent would have to co-sign and everything I've read says that's a bad idea. I think he can learn to live within the means of his checking account. It worked for my parents, it can work for him!
Your kids are lucky. If I wanted money, I had to earn it )part time job at a riding stable since age 12 and then in various shops at 16 onwards). My mobile I paid for as a prepaid credit. The only things my dad bought for me was bus&train tickets to get to school and any school essentials.
When I was at Uni, I managed my student loan myself and worked during the holidays. If I ran up a credit card bill I had to pay for it. It was the only way to teach me the value of money. Its much easier to spend money than it is to earn it.
Cindy, I'm a little uncomfortable with my stepdaughter having access to our credit limit. In addition to PASS, Amex also has a card we can set a credit limit on-- I think that might be a good option for my 19-year-old. She's nothing but a normal teenager, and I think we all know from our pasts that that means ANYTHING could happen as far as that card is concerned!
Nancy, your son's story sounds just about right. I think we all have to go through the experience of being overdrawn a couple of times as young adults- we (hopefully) quickly learn to never do it again!
Anonymous, I bet that your experiences were good for you, hard as they were. I think we need to be a little more demanding of our 19-year-old, financially. Our 17-year-old has a good job and is doing very well with her finances, considering her age. :)
I'm glad that it's going so well! The idea of having a kid on a 'main' card with a robust credit limit is definitely nerve-wracking - the idea of a separate, linked card with its own sublimit is a great one.
I hadn't known about 18-year olds needing a cosigner or a special exemption from that requirement - that seems strange to me if they meet the income threshold, but I remember CC marketers telling us to put scholarship funds in the 'income' category, so I guess it's not surprising that there's extra scrutiny.
I'm glad that individuals can apply for exemptions, and that folks who *are* self-supporting probably have cell phones, car loans or something else in their name to build up a credit history, though. Considering the heartbreaking stories that happened to some college kids before the rule change, it's really not so bad.
When I became a senior in high school my parents gave me a credit card that had my name on it, but it was really their account, so the bill went to them, and yes, I did have access to their credit limit. I was told to not use it without permission, and sometimes, I was sent to put gas in my mother's car and use the card. Sometimes I was sent to pick up things at the drugstore, and charge them.
My father would show me the credit card bill and point out "Here is the date when you used the card, here's where you used it, how much it cost..."
When I went away to college the next year I kept that card, and my parents gave me a debit card. They told me that every Saturday they would add $30 on it and I could use that for whatever I needed to buy, and to keep my receipts so I always knew how much there was on the card. If I needed something that cost more, I was to call and ask for more money and they'd discus it and decide, but I never did that. I was 17, and it was no problem.
I kept that credit card until I had two of my own in my name only, at which point I gave the first one back to my dad saying I didn't think I needed it anymore.
We had allowance ($1 per year per month... so at age 12 I got 12 per month) until I was 12, then we were all "cut off" because my dad lost his job. After that we had paper routes etc. I was allowed to babysit and have a paper route but my parents told me no other jobs until I had graduated. They paid my clothing and school stuff until then but didn't want my school work to slip. (I never had a cellphone (still don't) so there was no bills and I didn't drive until I finished school (my own choice)
I used the babysitting and paper route money to put myself through figure skating, a very expensive sport that took every penny I earned to skate even once or twice a week. In otherwords, I was always broke... which in itself probably taught me about how to budget. We never had a TALK about it so much, but I always knew how to save if I wanted something extra.
Oh my... I was "that kid" - I had my daddy's credit card and no boundaries... It was great while it lasted, my dad never mentioned the monthly bill and I just kept on shopping. However, when it can time to be on my own (and I do use that term loosely), I was CLUELESS! I didn't even posses the basic skills to make sure I could buy groceries (and there were many weeks I got by on saltines and beer - yes - there was ALWAYS room in the budget for beer....). Teaching her these lessons now (which she will think will suck) is the best thing you can do for her period... Being able to live off a certain amount of money is an invaluable skill! Keep working hard, use the screw-ups as chances to grow and keep the "real" credit card away from her!
For me, it was sink or swim. No money management instructions. No money to manage. As a child, I sometimes got birthday or Christmas money from a grandmother, but that had to last all year. My mom let me keep all the dimes she ended up with as change, so I saved those to cash out if I really wanted something. I asked for an allowance once. My mom said if I got an allowance, I would have to pay for my own things. I figured things were fine the way they were, so I didn't ask again. High school and college, I lived in another state and worked to pay my tuition. College, I also had to cover ALL of my living expenses except car insurance and repairs. I will NOT handle my daughter this way. I came out of it with an excellent understanding of money management, but I don't want to take the chance of my daughter finding herself in a situation without resources or the knowledge of how to handle them.
I think the prepaid card is an excellent idea, but I would also make sure she kept a register (like we used in checkbooks in the olden days). I think that is a very basic and important skill to have.
I think that the PASS card is a good concept for teens who are just learning to manage money and are still dependent on their parents for all their expenses. On the other hand, it's not the only way, and probably not the way I would use, because I think that teens tend to value money they made themselves far more than they value money that is handed to them, even with protections.
My parents never really discussed finances with me while I was growing up. I didn't have an allowance- if I needed money for something specific, I asked for it, and I knew better than to ask for money just to spend. Lunch out with friends, or money for tickets to an amusement park was handed over without hesitation, while general "shopping money" was generally limited to times when one of my parents was with me to pay themselves, or times when I needed a specific item. I was taught by example that money was for use on things we needed, or special events, not throwing around.
My dad was probably not expecting me to really follow through completely when he told me when I turned sixteen that I needed to get a job because I was going to have to pay for my college tuition. (Turns out later, they were willing to pay my younger sister's, so they probably would have done the same for me.) I took him seriously, though, and saved half of everything I made in a savings account set up in my name, with my dad as a cosigner. I also setup my own checking account and used the other half to pay for my own gas, lunches, and other expenses. I worked A LOT. Probably twice as much as an average high schooler in my area. It's not a good idea for every teen. You have to know your kids, how they do in school while working, how many extracurriculars they want to do, and how quickly they blow through a paycheck. On the other hand, better to blow through a paycheck and be completely broke at 16 than when you're on your own and can't eat or pay rent.
I overdrew a couple of times, not by much. I learned to watch my balances like a hawk-- funny how $30 doesn't seem like much until you're handing it to your bank in an overdraft fee.
I got my own credit card, through my bank, when I went to college. I used it to buy gas only, and paid it off monthly, intending to gain a credit history. I couldn't have done that without working as much as I did- I was paying tuition, gas, food, housing, and car insurance. Once again, you have to know your kids. There was no way I could have lived on what I did if I were a social butterfly, or involved in a sorority, or liked eating out a lot. But I stocked my mini-fridge, studied, and hung out in my dorm with other broke people. I had fun. It worked for me.
I'd say I'm not in favor of the PASS card as you're using it because there is still no real consequence if your teen runs out of money. No overdraft fee, no value of that money as something that had to be earned. Yes, when it's gone, it's gone, but does that really hurt anything at this point? Then again, I don't know your kids, and at 22, I'm not really sure how I'd feel if it were my child.
I know my college experience is vastly different from your daughter's - my parents were low income farmers who never had a credit card. So when I went to college I was almost totally on my own financially (this was in the early 2000s). Student loans & scholarships paid for my school & living expenses but I had to budget carefully. I did get a credit card in my own name that first semester but used it rarely & paid off the entire balance monthly. But it was my card & my responsibility - not my parents. It might be a tough lesson for her but I'd recommend to start cutting those financial ties slowly, like having her get her own card & be responsible for it; rather than being inconvenienced b/c of her mistakes. Since I assume ya'll are supporting her financially, you could ask that she give you the password to her online card acct to ensure that she doesn't get too crazy with it & keep the limit low. I do think your posts about teens & educating them about money are great & an area than many parents don't pay enough attention to.
My grandparents got me a credit card for my 16th birthday. It was my own account, but thru their account (if that even makes any sense). The bills came to me and I was responsible for it. I don't remember what the limit was, some ungodly amount for a 16 year old. At the time I received the card, I knew nothing, NOTHING, about balances and interest rates, etc. They just gave me the card and sent me on my way. I’m 33 now and am in total dismay as to why my parents, especially my dad, allowed this to happen. You would think at least one of them would have sat me down and explained the whole credit report affecting you later in life situation, but no. Needless to say, I used that card as if I had all the money in the world and never was concerned about paying it off. New clothes, heck yeah; gas for the car, no problem; whatever I wanted I bought. Lord only knows what all I “paid for” with that card. Obviously it caught up to me and I had creditors calling me wanting their money. The debt was eventually paid off but not without affecting my credit score in a negative way. It wasn’t until I was in my mid 20s that I realized how bad it was. I wanted to get a small loan to buy a used car and the bank wouldn’t let me even co-sign on the loan. My dad ended up getting the loan and I made payments to him. Fortunately, I learned my lesson and I now own my own home, put a substantial amount of my salary into savings and do not use credit cards. Based on my experience, I feel like teenagers should not be given credit cards – especially without being talked to about the circumstances that could ensue should the bill not be paid. Sounds like the PASS card is a great program and would have been a lot better for irresponsible high school/college me than the MasterCard that I carried around.
These are great stories, everyone.
As I'm going through this experience, I'm thinking that PASS is a great start to teens learning to handle their own money. I think it's a good option for high school and for college if your teens are getting a weekly or monthly allowance while in school to meet their needs.
I think college is also a great time for your child to get his/her first credit card. Amex has a card for teens and young adults that you can actually set a credit limit on yourself- That way they have it for emergencies, but they can't do any major damage with it.
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