The fees are helping drive the market for prepaid cards to young consumers, Godfrey said. "Up to now, banks ignored them because if they couldn't charge fees for checking accounts, they were too expensive to put into the business plan." But with fees, debit cards now "represent significant revenue dollars for financial institutions."
Travis Plunkett, legislative director of Consumer Federation, said: "It looks like the adolescents being targeted for this card will learn another unfortunate fact of life: More credit card companies are nickel and diming consumers with higher fees."
Barbie's Shop with Me Cash Register provides "realistic" accessories and comes with a toy American Express card.
(Carol Porter -- The Washington Post)
Hello Kitty is not the first plastic card aimed at children.
In fact, "teens' wallets are mostly full of plastic -- gift cards, store loyalty cards, phone cards," said Michael Wood, vice president of the Illinoismarketing firm, Teenage Research Unlimited. Wood said about one in six teenagers have debit cards. But now those cards are finding their way into the wallets of younger and younger children.
Last year, Visa issued a Hilary Duff gift card in five denominations from $25 to $200, to lure the preteen fans of the Disney star. Its promotions urged girls to "shop like a star."
Duff, in a press release announcing the card, said it was "the perfect way to shop for school and beyond. . . . Now I can easily buy stuff online without having to borrow my parents' credit card."
The Duff card was supposed to be for 13 to 17 year olds, but it turns out "parents bought it for very young consumers, 8 and 9," Klamka said. What makes the Hello Kitty card different is that it doesn't automatically expire when the amount on it is used up. Parents can reload the card anytime.
By contrast, the Duff card was a one-time card that couldn't be reloaded. And parents complained about that, Klamka said. "We had hundreds of parents calling every week saying they wanted to put more money on the card."
Parents of boys also called in, requesting a comparable product aimed at boys. "That's not as easy as you think; the market's very splintered on what influences boys," Klamka said. But he's working on it, and hopes to announce a new boy-oriented product "very soon."
The Visa Buxx card allows parents to put money on a child's account and then monitor his or her purchases, as they occur as well as at the end of each month. On Visa Buxx and Hello Kitty cards, teens can only spend the amount on the card; they cannot go into debt by going over their spending limit.
McKinley estimates there are about 100,000 Visa Buxx cardholders. Visa's Bentz wouldn't provide any numbers, but she said card users were increasing by 4 to 8 percent a month. Half the cardholders are ages 13 to 15; the rest are 16 or older, she said.
"It's no different than an allowance; just a safer way to manage an allowance because if you're a parent, you can find every place your daughter spent her money: how much, when and where," Klamka said. "You get a higher level of control than just giving your daughter $100 and say, 'Go to the mall.' "
Consumer advocates call the cards nothing more than "credit cards with training wheels," that teach the convenience of plastic without any of the consequences. "It's laying the groundwork for children to become credit card users as adults," said Plunkett, of the consumer federation.
Youth marketing executives predict more cards are on the horizon, particularly as the youngest generation uses the Internet to shop. "Up until now, the financial markets have been a little gun-shy about targeting kids directly, but I think that will change and a debit card is a vehicle that provides that opportunity," said Paul Kurnit, president of KidShop, a New York youth-marketing consulting firm.
The pleasures of plastic are not just being waved at 8- and 9-year-olds, as a visit to any toy store will demonstrate. There is Playskool's Eazy Scan Supermarket for 3-year-olds that comes with a swipeable credit card. Barbie's Shop with Me Cash Register takes the retail experience one step further with what it calls "realistic shopping accessories;" in this case it's a toy American Express card. The toy promises "hours of nonstop fun . . . to enhance social skills" while learning.
For slightly older girls, 9 and up, there is the Mall Madness board game by Milton Bradley, where the goal is to "find the steals and deals." The winner is the first shopper to make six purchases and get to the right destination. To do that, girls can swipe their cash card or get money at the ATM. As the blurb on the box says: "Hey girls! Don't miss the next big sale."