Issuer defends payment card for kids

A payment card issuer today defended its decision to issue pre-paid cards to children as young as 13, claiming they helped stop bullying and promoted good financial management.

Bluecorner is offering the cards in association with teen magazines such as Smash Hits! and Bliss, as well as through radio station magic FM, where they are aimed at adults who do not have a bank account.

The cards, which are backed by Mastercard, have to be loaded up with cash by children's parents, and they can then be used to buy things over the internet, in shops or to make cash machine withdrawals.

It is not possible to go overdrawn on the cards as children can only spend money that has been deposited in their account.

But the National Consumer Council (NCC) expressed concern that giving the cards to children as young as 13 could encourage them to get into debt when they were older.

A spokeswoman said: "There is a risk that as parents are charging up these cards, children could get used to using plastic and spending money that isn't their own.

"This could predispose them to using credit cards when they are older."

She added that for people who did not have a bank account the cards were a useful way of managing their money, although they could be expensive.

But Mark Kennedy, chief executive of Bluecorner, said the cards were safer for children to carry on them than cash, and they helped promote budgeting skills as there was a limit on the amount of money that could be spent.

He added that parents could also monitor on the internet how much money their children were spending, and talk to them about budgeting, while the group also runs competitions on its website for children who use the cards to budget.

He said each of his three children had one of the cards.

The cards cost £9.95 to take out and £4.99 if the accounts are cancelled. There is a £4.99 fee to renew the cards after 12 months and the same charge is applied if a replacement card is needed.

There is currently an 85p fee for withdrawing cash from an ATM using one of the cards, although people can get cashback from Tesco and Marks & Spencer for free.

Mr Kennedy added that the group was considering stopping children from being able to make ATM withdrawals, as it was safer for them not to carry cash on them.

He added that it was currently the only pre-paid card on the market that did not charge a monthly management fee.

The group is currently working with Hertfordshire County Council and Hertfordshire Police looking at giving the cards to children without them having to pay the initial £9.95 fee as part of an anti-bully initiative.