[Julie Vazquez]

I came across this article this morning, Are prepaid cards right for your kid? on CNN Money and thought it would be an interesting topic to discuss. Do you give prepaid cards to your kids? Do you think it's a good way to teach them about money?

Prepaid plastic can be a useful tool for parents who want to monitor a child's spending and teach budgeting. But such lessons come at a price: The cards are often riddled with fees.

[jhamilton]

Early last year, I got my daughter a prepaid mastercard through our credit union. There are no fees associated with this card. The main purpose of it was to be able to put money into a bank account where it could be accessed easily by her. My daughter is young, 5 years old, and the idea was that the money she decided to "save" would be put on the card so if later she wanted to make a purchase while we're out, I could pull the card and she could pay for the item her self.

As time went on, it turned out that the card was just not used like intended. So, a new savings account through was established for the purposes of saving money. After reading the CNN article, I really like the idea of having it available to her for school trips which Eliminates the fear of lost or stolen cash. The card may also find it's way to Grandma's house, as my parents watch her on a regular basis, so that she will have some of her allowance money available while she's with them. As for now, she has a nice amount just sitting around that she's forgotten about, though it's not earning any interest.

I can see this card being very useful for people with older children, 16-18, who are knowledgable about money and are responsible young adults. The good thing is that they can stay with the "cool crowd" by putting stuff on plastic but without incurring the debt! And again, we don't have to worry about the cash getting stolen out of their school bags or purse. How great is that.

[EStimpert]

My children are not old enough for it yet, but wish cash slowly being replaced by debit cards, I think its not that bad of an idea. Ive already explained to my four year old why I use a debit card and where the money is and where it comes from.

[PatricePeyret]

Disclosure: I work for Plastyc, a company which provides prepaid cards for teens (UPside Visa)

What we find is important to parents (and kids), is the ability to transfer responsibility gradually from the parent to the kid for managing the pocket money or allowances.

Checking accounts coupled with debit cards almost never allow such gradual transfer because only one person is given access to the account: the parent. So the kid is really not given the opportunity to demonstrate responsibility by managing the account himself or herself. Notable exception: Wells Fargo has a checking account for teen with dual parent-teen access. There might be some other bank offering the same, but the overwhelming majority of the banks or credit unions just don't offer that capability.

Prepaid cards specifically tailored for teens like UPside Visa, VisaBuxx, MasterCard FaceCard or American Express Pass offer dual access, with the parent having supervisory privileges (and the ability to add money)

Prepaid cards are usually only available above the age of 13, to stay compliant with the Children Online Provacy Protection Act. Of course, parents can always decide to grant younger kids (tweens) access to those cards, but, frankly, the older kids (15 and above) derive the most benefits and tend to have the maturity required to manage some money on their own.

We have published a list of books for parents about teaching financial literacy to their children on the Spend Responsibly website.