Is AMEX reading my BLOG? It's a PASS card!

American Express must have been reading my Blog about credit and prepaid cards! As if on cue, I received a mailer announcing their PASS card for teens.

They clearly state that it's not a credit or debit card. It's a prepaid card that is re-loadable. (Think of your Starbucks card that you keep reloading for your caffeine fix.)

I like it because:
1. It will teach your teen (age 13 or older) to spend only the amount that is loaded on the card so they can't over spend.
2. It can be used any place that accepts the American Express card: stores, movies, restaurants, on-line and ATM (if set up).
3. Both Adult and Teen can set up on-line access to track card's purchases, balances and account set up. And there are some nice financial education tools on-line.
4. You can reload the card easily.
5. Card can be replaced if lost or stolen.

I don't like it because:
1. You can reload the card easily. (Yes, it's a benefit, too.) But this means that you as a parent will have to firmly set the rules about how much will be loaded...and reloaded. Decide how you will use the card and set the rules.
2. Card can be replaced if lost or stolen. (OK, another benefit.) But this means that the child may be more careless with the card if they know "all will be fixed" if they lose it. Think about the cell phone insurance you buy for your kids phone...and how many times they lose it since they know it will be magically replaced.
3. There are fees with the card. (What? Did you expect AMEX to offer this for free?) Monthly Membership fee of $3.95 (currently waived until Oct 2011 which is nice marketing) and ATM fee of $1.50 (plus any fees the banks charge). It would be wise to monitor the fees as I am sure fees will change as the program grows.
4. It does not build credit so use it strictly for teaching to spend within a limit.
5. While the PASS is great for ages 13-16, your older teen should have a checking account with a debit card - which probably has lower fees and will teach them to have adult financial tools vs a prepaid card.

Bottom Line:
It's a great tool to use - just make sure you are using it for the right reasons, set the rules and know the fees associated.

Here's the link to the American Express PASS so you can check out the fine print and order one for your teen.