Drastic plastic or a trump card for kids?

Drastic plastic or a trump card for kids?

Worried by the thought of your teenage children demanding their own cash and debit cards? The answer could be a pre-paid card. In the US they are a must-have item for every youngster already, and if teen mags such as UK market leader Bliss have their way, they'll soon be in your kids' pockets too.

Pre-paid cards work like a credit card. But the big difference is that the user can only spend money loaded on to the card upfront, and cannot run up any debts. That means that anyone - the card companies usually specify 13 as the minimum age - can apply for a card as they don't require any credit checks or a bank account.

Most pre-paid cards allow users to spend the money at any store which accepts Visa or Mastercard. They can also be used to withdraw cash at ATMs.

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Once the money runs out, you can top up your card either in cash at designated outlets such as PayPoint shops or post offices or - more to the point - parents, relatives and older friends can top it up online using their debit or credit cards.

The marketing messages are persuasive. Bliss magazine's website blissmag.co.uk, for example, asks young girls: "Are you sick of nagging to borrow your parents' credit card to pay for stuff? Well the brand new Bliss Platinum Prepaid Card is perfect for you!" It goes on: "Shop 'til you drop with your very own exclusive Bliss Platinum Card ... owning a Platinum Card gives you membership to the bliss Platinum Club where you can get discount in shops and on websites, and loads more." Oh, and adds: "It costs just £9.95."

And there's the rub. While you might just be persuaded by the card companies' arguments that such cards can be "educational" (by giving youngsters an awareness of budgeting without the risk of going into debt) you may think again when you see the raft of charges imposed.

Take, for example, the Extreme Cred Card (extremecred.com), a prepaid Maestro card from the owners of the Extreme Sports Channel. This "awesome pre-pay card for you and your mates" costs an upfront purchase fee of £8.95. To top it up at a post office costs 70p a time, while to reload it online or at a PayPoint terminal costs from 85p for a £20 top up rising to £15 for the maximum £500 top up.

You pay a £1 fee each time you use the card to withdraw cash from an ATM and a 2% transaction fee if you use it abroad. Then if a card is lost or stolen, or it expires at the end of its 12 month lifespan and you want another one, a replacement costs a further £3.99. The same fee applies if you want to cancel your card and have any money left on it refunded.

Meanwhile, another type of pre-paid card - the Mint Gift Card - has been launched this week. And this may appeal far more to parents wanting to give their children some spending money, or anyone searching for a suitable present.

As its name suggests, the new Mint card is designed as a "gift card" akin to those issued by many retailers including Debenhams, HMV, WHSmith, Tesco and Topshop and by shopping centres such as the Bullring in Birmingham, the Trafford Centre in Manchester and Buchanan Galleries in Glasgow, whose card can be used anywhere displaying the Mastercard/ Maestro logo. But, unlike one-store or one-shopping-centre gift cards, the recipient has the freedom to spend the money on their Mint card in any high street, online or overseas retailers that accept Visa Electron.

The card can be bought by anyone over the age of 16 (though can be given to people of any age) for £3 online at mint.co.uk/giftcard and pre-loaded with any value between £10 and £250. You can choose to have the recipient's name and a personal message lasered on to the front and have the card sent to you or direct to the recipient. Unlike many prepaid cards, the Mint card cannot be topped up, expires after 12 months, cannot be used to withdraw cash from ATMs and has lower charges.

Aside from the £3 purchase fee, it charges 2.75% commission on overseas transactions and "may" deduct another £3 fee if a card is cancelled and funds are redeemed.

More versatile than a one-store gift card or voucher and more personal than cash, the Mint card could prove popular with anyone stuck for a present idea, particularly those who dislike being dictated to by wedding lists.

Guardian Unlimited © Guardian Newspapers Limited 2006