In Germany, minors cannot apply for a loan. They are also denied a classic credit card, in which payments are deferred initially and later paid by the cardholder. A prepaid credit card is therefore suitable as a credit card for young people. It works on a credit basis.
Young people are not allowed to take out loans in Germany without further ado. For this reason, credit cards for adolescents have a very specific property: they have to be topped up by the parents or the card holders themselves.
Similar to the prepaid mobile phone contract, holders of a prepaid credit card can then have the loaded credit until it is used up. They don’t get a credit line. This keeps expenses under control and defaults are eliminated.
The most used prepaid credit cards are provided by Visa and MasterCard and can be requested through banks and savings banks. Our tip: pay attention to the annual costs. The fees differ considerably from provider to provider.
But what is the advantage of a prepaid credit card compared to cash? More and more young people no longer go on vacation with their parents, but prefer to spend the best time of the year with their peers. They often get the money for their daily expenses in cash. However, if the cash is lost, the remaining vacation time becomes a problem.
Many prepaid credit cards provide free cash at ATMs abroad. So teenagers can always get smaller amounts of cash and leave the rest of their financial reserves on the card. After that, nobody can have the credit on the card. The provider issues a replacement card and transfers the remaining credit from the old to the new card. As a rule, the replacement card is also sent abroad within 48 hours.
Providing young people with a credit card also has advantages for parents. The youngsters are introduced to the use of electronic means of payment and learn that they must keep an eye on their financial framework when paying with their signature. A credit card for young people may not be absolutely necessary for shopping in brick-and-mortar retail – an ordinary current account including an EC card is certainly sufficient for this.
However, in the digital world, a credit card for teenagers has some advantages. In many computer and online games, for example, users can deposit their credit cards to buy additional equipment or to unlock level extensions. Parents can use the prepaid credit card to assign a fixed budget to their offspring, which they can use independently. This is how young people learn how to use their money to do household chores.