Teen Debit Cards Get Mixed Reviews

Sept. 5 -- If debit card Visa Buxx is like a credit card with training wheels, some are complaining that teens are riding for a fall when it comes to learning to manage their debts.

The Visa Buxx card is similar to a pre-paid phone card in that it has a certain amount of money on it that consumers can spend. There is no interest charged for purchases, but users are limited to the amount of money on the card. Once that's been spent, parents have the option of reloading the card with more money.

But as teens collect record amounts of debt as they sail into college — the average university student carries several thousand-dollar credit card balances — the Consumer Federation of America says Visa Buxx cards aren't teaching teens how to do anything but spend.

"The average college student now has three credit cards, so children are where the profits are going to be for the credit card companies," says Travis Plunket, legislative director of the Consumer Federation of America, or the CFA.

Passing the Buxx

Visa argues the Buxx cards encourage teens to spend responsibly by enabling parents to limit how much money is available to spend. The company also offers an online "Be Cents-ible" quiz to help children learn basic concepts about budgeting, developing a strong credit history and setting financial goals.

"The parent has all the controls," explains Rhonda Bentz, Visa's director of public affairs. "The parents can view the teens' expenses any time online."

But the CFA's Plunket says the online quiz is laughable, noting that the answers to the questions are displayed on the left side of the questions on the computer screen.

Visa officials say the quiz is not exactly the SAT.

"It's not meant for people to flunk, it's meant for people to be educated and understand how this all works," says Bentz.

Bad Habits Run Deep

Despite the CFA's objections, other groups note that at least the financial services company is making an attempt at educating young people on financial basics.