BBB BRIEF: Teaching teens money smarts

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SPRINGFIELD, Mo. The Better Business Bureau is giving parents some advice before giving teenagers a debit or credit card. Here are the benefits and pitfalls of each.

Adding a teen as an authorized credit card user should take a simple phone call and you can usually get a separate breakdown of their charges. The downside-- the card will have your limits and no restrictions on spending. If your teen travels abroad, also beware of high transaction fees, especially on cash advances.

Not ready to trust your child with your own credit? The Better Business Bureau says you can set daily spending limits if you link a debit card to your checking account. You can also decide if cash withdrawals are allowed. But if you don't sign up for overdraft protection, transactions will be denied when funds aren't available.

Finally, you could consider a prepaid debit card for your teen. These cards are reloadable. You can buy them at stores, banks and online.
Money is transferred from your bank or PayPal account.

"That means that there's going to be a certain amount of money that's loaded on there. You don't have to worry that they will go over and have these extra charges you didn't know about. But if there's an emergency, for example if they're running out of gas on the highway.... Unfortunately, if they already spent their money and they haven't planned for it, then they're in trouble," warns Stephanie Garland of the BBB of Southwest Missouri.

Garland also warns parents to watch out for hidden fees on prepaid debit cards. You could get charged a monthly fee or even for calling customer service. Prepaid debit cards also don't help build a credit history.

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