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Dear Olga: Helping Family

Dear Olga,

I live far from my family. My niece and nephew are teenagers and I would like to have some financial contact with them. I was thinking of a prepaid credit card. Any other suggestions? Or tips in using it?

Thank you,



Dear May,

A prepaid credit card can be a good way to give your niece and nephew some financial support while maintaining some control. With prepaid credit cards, you load an amount onto the card before anything can be spent.

It's helpful to consider what you're trying to accomplish with your financial support, first. Are you trying to teach them financial responsibility or provide support in case of an emergency? Are you going to send a monthly allowance and is there a limit to how much you're able to send?

This will be a responsibility for you as much as it is for them. So before opening any accounts, think about these questions because knowing what you're trying to achieve will make your next choices easier.

When picking a prepaid credit card, there are a couple of things to consider:

  • Monthly fees - some banks require a minimum deposit to waive fees (typically $1,000) but typically fees are about $5 per month.

  • ATM fees - do you want your niece and nephew to be able to withdraw money from the card in case they need cash? Some bank allow you to shut off this feature, especially when there are additional fees associated with ATM withdrawals.

  • Activation fees - a one-off fee you pay to activate the cards when you create the accounts.

  • Reload fees - this will be a fee you pay every time load money on the cards. If you're going to be reloading the cards regularly, you want to be mindful of cards with high reload fees.

  • Foreign transaction fees - these fees can be as high as 3% of the total amount processed per transaction, so if your niece and nephew travel this may not the way to go. There are other ways of sending people money that can be more cost efficient.

To make this choice easier, speak to the bank you already bank with. Go to a local branch, if you live near one. If not, call up your customer service number and ask them to go over the options they have for prepaid credit cards. As an existing customer, they will be happy to help you open an account and keep your additional business with them.

If your bank doesn't have a prepaid credit card offering, consider a bank that's close to your niece and nephew. This way, if there are any issues with their cards, they can always go to a local branch in person.

My last piece of advice is before you give your niece and nephew their cards, make sure to have a money talk with them about your expectations and how they are to use these cards. This will set clear expectations and what's acceptable. If they don't follow the rules, you can always refer back to the expectations you set with your first money talk.

I hope this gives you a good idea how prepaid credit cards work and where to start your search. If you have any questions, contact me!


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