SpendSmart touts the card as an opportunity for parents to teach their teens about personal finance. Parents load the card, which carries the MasterCard logo, with cash for a fee ranging from seventy-five cents to $2.95. They then turn the card over to their teens who can use it to shop wherever MasterCard is accepted, including online. Parents are able to monitor their teens purchases online and even block them from shopping at retailers they disapprove of. Additionally, particularly hawkish parents can opt to receive alerts via text message whenever their teens make a purchase with the card.
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For his part, Bieber is promoting the card on his personal YouTube channel (as well as other social media outlets, including Facebook) through a series of videos titled RealTalk. In them, Bieber encourages teens to talk to their parents about money and monitor their spending. Bieber’s deal with SpendSmart will yield him $3.75 million over 14 months, with the possibility for additional income from royalties and stock options.
SpendSmart is hopeful that Bieber’s blend of celebrity and social media-savvy, as well as the modern capabilities of card will make it a hit with teens and parents alike.
While SpendSmart is counting on Bieber to promote their pre-paid card as a teaching tool for teens, financial experts continue to be wary of the high fees charged by pre-paid cards. According to The New York Times, the SpendSmart card endorsed by Bieber carries a $3.95 monthly fee, as well as fees for loading funds on the card (between seventy-five cents and $2.95), withdrawing from ATMS ($1.50), and for inactivity ($3), all of which are substantially higher than fees associated with a conventional debit card.
Do you think that pre-paid debit cards are the best way to teach teens about money?