Credit Cards for Kids? Not in My House

I'm sure the person who gave those little girls those cards thought it was cute. He or she probably thought it was harmless.

But make no mistake about it, a prepaid credit card in the hands of a child sends the wrong message. It disconnects the child from the reality and limitations of using cash. Studies show that when you use plastic to pay for things, you tend to spend more money. This is the case even for people who faithfully pay off their bills every month.

I'm not a fan of many prepaid cards because of the numerous fees, which vary according to the issuer. There is a set-up fee (I saw one as high as $159.95). Then you have to pay to load money onto the card. You may have to pay a monthly maintenance fee (typically $4.95 to $6.95) and/or an annual fee (up to $99.95). You may also be charged an inactivity fee if you don't use the card.

But it wasn't the fees that bothered my husband and me so. It was the idea that children are being trained to use credit-like products at a younger and younger age. Giving children a credit card, or card that looks like one, is a bad idea.

Prepaid credit cards might as well be the real thing. Just because the kid can spend only what's on the card doesn't make it okay. They are not the same as gift cards because the intent is to emulate the credit-using experience. But our children need to know what it feels like to pay with cash for as long as possible. When my daughter has to use her own cash, she often decides to spend less.

I know many people disagree with me on this issue. Some parents think that giving a child, teenager or college student a credit card teaches money management. Give it to them while they're young, they argue, and you can guide them on the proper use of credit.

You are kidding yourselves.

"Giving your kids credit cards is like letting them use drugs early so that they won't turn into addicts," says Janet Bodnar, columnist and deputy editor for Kiplinger's Personal Finance and author of "Raising Money Smart Kids."

Will some of you have a child responsible enough to handle credit well? Sure you will. But it's also more likely that your child will do what many adults do -- misuse and overuse the plastic devil.

Most children don't have the capacity to understand what they are getting, Bodnar said. They just know they have something that looks like a credit card that their parents can put money on again and again.

I was livid when the popular Hello Kitty brand for children introduced a MasterCard debit card targeted at 10- to 14-year-olds. Don't think for a second the companies marketing these cards have our children's best interests in mind. They have one goal -- to hook a customer as early in life as possible.

We are being hoodwinked and bamboozled by the credit card industry. Look, these people are dealers of debt. They shouldn't be trusted with our children.

· On the air: Join Michelle Singletary at 7:10 p.m. tomorrow on "Insight" with Herman Washington on WHUR, 96.3 FM. She also discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

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