April 16, 2006

By Peter Kenny

Just recently there was some discussion on the emergence of prepaid for young people. The fear was that with issuing teenagers with a credit card we were not teaching them the true value of cash.

A new prepaid credit card that had everyone talking was from Splash Maestro, which was advertised in magazines aimed at young people. The Splash card had a funky layout and bright colours designed to appeal to a young person.

The way a prepaid credit card works is that you load the account with funds, the cardholder can only withdraw what is in the account, no overdraft is authorised or allowed. Our opinion at the time was that in theory this was a good option to allow parents to control their child’s spending, knowing they can never be overdrawn. The prepaid credit card works as a debit card and takes funds from the account immediately at the point of sale.

A major consideration when using a prepaid credit card is the start up and running charges. All the prepaid charges came with a £9.95 start up fee. A couple of them charged a monthly service fee of up to £4.95. Every time a person withdraws cash from a cash machine there was also a fixed fee of up to £2 per withdrawal. Finally there was even a fee just for depositing funds in the account. For a credit card that is targeting teenagers whose income was very limited in the first place these fees were in our view excessive.

If you were interested in giving your child a credit card and wanted to avoid the fees why not consider opening a BarclayPlus account. A BarclayPlus account caters for two age groups, 11 – 15 year olds and 16 – 19 year olds. It is a current account, however, you can also get a Visa debit card. The debit card can be used to make purchases and it can also be used to withdraw cash from an ATM machine. The advantage of using a BarclayPlus card over the prepaid card is the lack of charges, there is none! No start up or maintenance fees, no cash withdrawal or cash loading fees, quite frankly there are none.

Any funds in a BarclayPlus account earns interest at 1% AER (as checked on 16 April 2006)

Click here for more information on a BarclayPlus Debit Card