According to CNNMoney, Justin Bieber is launching a prepaid debit card targeted at his teen fans. The card is not the worst celebrity endorsed debit card ever, but it sure doesn’t seem to fit the implied intent of the spendsmartcard.com domain name that it can be found at. The card is just a way for teens to get ripped off every month for $3.95 just for having the card, plus fees for withdrawals, for adding money to the card, for checking the balance or even for not using the card for 3 months. It’s a rip off from beginning to end. Worse yet, it’s a rip off that has an alternative with no fees.
Any parent that gives their teen this debit card is sending the wrong message when it comes to fiscal prudence. By far the smarter choice would be to teach their teens to avoid fees whenever possible. Teens would be much better off being given the cash or another fee free debit card. Cash is taken everywhere and you don’t incur fees for having it.
In fact, I think this poor choice of endorsement by Bieber would be a great opening to talk to your teens about money if you don’t have an open dialogue about it already. The key to teaching teens about money and budgeting, like Bieber is pretending is his purpose in his YouTube video, is to teach them to think about how they save and spend. It’s not about teaching them to use plastic. It’s also not to teach them to get suckered into using a product because a celebrity endorses it. If your teens don’t know it yet, celebrities are like everybody else. They’re motivated by money and they don’t mind separating you from a little more of yours without returning any value in exchange. So, teach your teens to evaluate whether or not any financial product they are being offered is a good choice.
Tricking teens and young adults into poor financial products is nothing new. When I was in college, the credit card companies would come on campus and offer t-shirts for sign ups. A free t-shirt for signing up for a credit card should not trick people into overlooking the fees or interest rate that is offered. It seemed to though. Believe me, I saw many people sign up for cards. I’m not sure if the shirts were the main motivators, but they definitely sped the process up.
So, don’t assume your teen knows everything you have learned over the years. Talk to them about why the product that Justin is endorsing is a poor choice for any consumer looking to use their money efficiently. You should also talk to them about budgeting, shopping for deals and the online sites that they can use to either find the place with the best prices on a given item, like PriceGrabber.com or an online coupon site that can get them discounts. Better yet, they should use both together. The key is that you need to open up a dialogue about how money is important and why they have to be careful in how they spend it. All too many young adults get themselves buried in debt and then spend years digging themselves back out. If you can save your kids from that, you’re doing them a tremendous service.