We recently wrote about the Kardashian prepaid debit card being hawked by reality TV stars Kim, Kourtney, and Khloe Kardashian. Since then the Kardashian sisters have cut their ties to the card after a flurry of complaints about excessive fees associated with the card that was targeted at teens.
Celebrities and cartoon characters
Although the Kardashians were smart to pull out of their prepaid debit card deal to avoid further backlash, it appears that other prepaid cards are being marketed to teens using celebrities and cartoon characters. Myplash has prepaid MasterCards for teens with over 100 designs that include characters such as those from the Twilight movies, according to an article at TheStreet. Teens can also get a prepaid card with cartoon characters, athletes, and musicians.
While some parents may think these prepaid debit cards are a way to help teens avoid credit card debt, it’s important to remember that they usually have a lot of fees. Some common fees for prepaid cards are activation fees, monthly fees, reload fees to add to the balance, and inactive account fees. There may even be fees to receive paper statements, make electronic bill payments, or contact customer service.
Avoiding credit card debt
There are a lot of ways to teach teens about avoiding credit card debt, but prepaid debt cards aren’t necessarily the best way to do that. If you choose to sign your kid up for a prepaid credit card, make sure he is fully aware of all the fees involved in order to make the most informed choices about using it. If your teen already needs help with debt, avoid signing up for new cards until existing balances are paid off.
Struggling with credit card debt can impact all aspects of your life, and it ain’t pretty. Arguments over money and spending, yelling at the kids, receiving unwelcome phone calls at work, these are a few highlights of living life under a burden of debt. What can you do if you can’t afford to pay off your debt? Debt consolidation and credit counseling services work with you and your creditors to accomplish the following goals:
- Review your financial information for developing a cash based budget and an affordable repayment plan for your debts
- Financial counseling: This can assist with determining how and why you got into debt; you’ll learn about inappropriate motivations for spending and receive advice for budgeting and debt management.
- Based on information you’ve provided, credit counselors negotiate with creditors for waivers and/or reduction of finance charges, and for establishing affordable repayment terms. If you don’t qualify for a debt consolidation plan, credit counseling services can refer you to additional services and debt consolidation resources.
- Provide a written repayment plan, along with its terms and conditions including where, when, and how much you’ll pay toward your repayment plan.
Credit counseling and debt consolidation help: What they can’t or won’t do
- No instant results: Don’t confuse debt consolidation and credit counseling serviceswith unsolicited offers and advertisements for “instant” credit repair, or offers promising to “erase” bad credit. Sorry folks, but rebuilding credit takes time and effort. Credit counseling services cannot remove negative entries from your credit reports; these will drop off in time.
- Make excuses to your creditors: It’s essential to make payments to your credit counseling service exactly as required in your agreement. Missed payments can lead to termination of your plan.
- Giving up your credit cards: Debt consolidation and credit counseling services typically require that you close all active credit card accounts as a condition of your debt consolidation and repayment plan. Although your credit will likely improve over time as you repay your debt, your credit counseling service cannot guarantee that you’ll qualify for new credit cards after your debt consolidation and repayment plan is completed.
Gaining freedom from debt through credit counseling and debt consolidation plans can improve your finances and overall quality of life. Cooperating with your debt consolidation and credit counseling service is a first step toward regaining financial solvency.
December is a big shopping month as people look for gifts for family and friends. To avoid overspending this year so you don’t derail your debt reduction plan, make a pledge to only buy what you can afford. Use the following tips to avoid wracking up credit card debt over the holidays.
Know your limits
Sure that 52 inch TV would look great hanging on the wall in your living room. But does the price tag for such an expensive gadget fit into your budget? Don’t even think about heading out to shop without putting together a list of who you plan to buy for and how much you can afford to spend per person. Don’t just have a vague figure in your head. Actually write down a plan of action and follow it.
Pay cash for purchases
That means you either need to have cash in your wallet or use a debit card to access money in a bank account. Cash is best because you’ll likely spend more time shopping for the best deals to make your money stretch. Debit cards also keep you from spending what you don’t have, but if you don’t keep track of your purchases there is a risk of overdrawing your account.
The gift of debt counseling
If you can’t curb the impulse to spend no matter what you do, consider getting help from a debt counseling firm. Getting help with debt can allow you to get at the root of spending issues, which could be the most important gift you receive all year.