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For some teens, debit cards are as essential as car keys, part status symbol and part convenience. If you're old enough to open a checking account -- or get your parents to co-sign on one -- you're eligible for a debit card.

Parents and financial experts agree that debit cards can act as financial training wheels for teens before they get a credit card. But parents should track how teens use the cards, the experts advise.

"It's not like real money because I never see the cash," said 16- year-old Kara Moore of West Des Moines, Iowa, who said she buys clothes with her card.

Her friend, Natalie Loots, 16, of Clive, Iowa, sees it differently. "I am afraid if I had a card, I would spend more money," she said.

Debit cards should be viewed as an opportunity to do some financial training, said Tom Coates, executive director of Consumer Credit of Des Moines, a nonprofit credit counseling organization.

"Debit cards are part of our day-to-day lives right now," he said.

The Foundation for Credit Education says the benefits of debit cards for teens include:

uThey give teens experience for managing their money. When they know that they only have a certain amount of money in their debit account to spend, teens are more inclined to keep track of their spending.

uDebit cards cannot be used for credit purchases, so teens can't rack up loads of debt.

uSome teen debit cards have special features that allow parents to receive automatic e-mail messages that tell them where purchases are being made. Some cards can be "recharged" with additional money instantly over the telephone or from a Web site.

Jim Knoblauch of Urbandale, Iowa, thought it was a good idea when his son Sam, 17, proposed getting a debit card last year. He guided his son through the process of recording purchases and balancing the account each month. "[Sam] has never been overdrawn," he said.

When his three older daughters went off to college, they had not had checking accounts or debit cards. The lack of experience contributed to some major bumps in their financial paths, he said. "I didn't want another kid going through that," he said.

Teenagers will spend about $158 billion this year, according to Teen Research Unlimited, a Chicago-based company. Research also shows that about 3 percent of youths between ages 12 and 15 had debit cards; 18 percent of 16- and 17-year-olds had cards; and 50 percent of 18- and 19-year-olds used debit cards.

"If a student gets a credit card, make sure it has a low limit and that the limit cannot be increased," said Susan McDonnell of the Iowa State University Extension Service. "The trick is to teach kids how to save, spend and share their money."

# posted by Medical Information : 3:33 AM