A few weeks ago, I had a jolly ol' time writing about a new prepaid card called BillMyParents, which, like the name suggests, is a card that teenagers can use to spend on things, and Mom and Dad pick up the bill. I enjoyed having fun at BillMyParents' expense since, after all, the creators of the card seemed to want my kids to shop at my expense.
So I wrote "Teenage dream: the BillMyParents prepaid card", which received a fair amount of attention and was mentioned on a few news outlets like FoxBusiness.com, and went on my merry little way. And then the next day, I received an email with the subject line: "Hello From BillMyParents."
Oh, I thought, clicking onto the nearest travel site to check for international airline flights. They've read my article. They probably want to congratulate me for writing such an entertaining piece. I'm sure they haven't sent any hulking figures over to my house to have a chat with me. Hmmm, I've always wanted to visit Uruguay.
BillMyParents defends their prepaid card
As it turned out, the email was from BillMyParents' spokesman, John Hickman, who did indeed want to talk to me about my article. Hickman was friendly and nice, and so we wound up chatting over email and the phone. For those who haven't read my original article, I basically grumbled about the name and thus the lesson BillMyParents seemed to be teaching kids: Hey, don't worry about it, charge up a storm and Mom and Dad will pay for it.
But Hickman made some good points, and since he was so affable, and I didn't have to hide out in Uruguay, I thought I'd finally give him some space to make his case for using the card.
The story of BillMyParents
As Hickman related it to me, one of the card's founders, Jim Collas, came up with the idea for the card after "struggling over the money and budgeting issue with his then-15-year-old daughter. She didn't value the money he gave her, they couldn't track the cash she spent, and providing a cash allowance didn't give her any control over or teaching opportunity about her spending. He couldn't find a satisfactory solution, so he built his own."
Hickman says that the main goal of BillMyParents is to leave a trail for tracking a teenager's spending. Of course, you could do that with a credit card, but Hickman points out that you only get a statement once a month, so it can be pretty hard to sit down with a teenager and observe mistakes that they made 27 days ago and expect them to learn much from it. But with BillMyParents, he says, the parent knows in real time, at all times, what their child is spending. Parents receive instant text alerts the moment their teen has made a purchase.
Advantages of BillMyParents
Of course, I know what you're thinking. Why not make your teenager an authorized user of a checking account, hand them a debit card, and then follow their spending through the bank's website? And you could certainly do that, but as Hickman says, the advantage of BillMyParents is that the parent can lock the card if they think their teenager is going overboard, which is less extreme and permanent than, say, canceling the debit card.
After locking the card, explains Hickman, "the parent can then have the conversation with their teen in the moment, rather than hours or days later when they find out what happened."
Plus, with a teenager and a checking account, if they make a few mistakes that you don't spot in time, you could be looking at some serious damage in overdraft fees. "Since it isn't a credit card," adds Hickman, "it doesn't allow teens to rack up charges or debt. It doesn't support building bad habits around cards. It's intended to be used within a budget or allowance and won't result in credit risk."
I kind of hate to admit it, having had so much pleasure in mocking the card, but Hickman does make a strong argument for his client's product. I'm personally still not convinced that I should get the BillMyParents prepaid card for my girls when they someday reach teenagerhood because of the fees involved. That said, all prepaid cards come with fees, and so if that doesn't bother you, you may well decide that this is a perfectly useful money-teaching tool.