My philosophical question centres on whether the decline in the humble ‘piggy bank’, the increase in children specific pre-paid cards and the introduction of associated monthly charges is creating a generation who will grow up viewing current account charges as normal……
As a parent I am keen for my children to understand the value of money and importantly for them to learn this at an early age. Indeed in an ever increasing cashless society the need for them to understand the value of money in all its forms is as crucial as being able to pay for their toys from the saved money in their much loved piggy bank.
The arrival of children specific pre-paid cards is therefore a great addition to our parental ‘tool set’ to teach our children the ‘value of money’. These pre-paid cards enable parents the ability to teach children to use cards (and the associated money) whilst providing close controls at a distance. Indeed the highly marketed Go Henry and Soldo cards also allow parents to set certain parameters as to how their children can spend their ‘pocket’ money.
As a parent of an 8 year old boy these pre-paid cards were recommended to me by a friend, however, as someone who works in the financial services industry I took a look at these (and other comparable) products more closely. It seems that all of these child specific pre-paid cards have some type of fees associated with them. In the main you are paying £2 to £2.50 monthly fees (which may be nearly as much as the pocket money itself) and also there are other one off charges e.g. c. £4 for lost cards. Interestingly there are children’s bank accounts with a debit card (with no overdraft) on offer, importantly with no monthly charges, however, the minimum age is 11 and they do not give the same level of spending controls to the parent.
So this raises 3 key points:
Firstly, the dilemma for parents - do we get pre-paid cards for our children to support their financial awareness, however, in the spirit of openness – do we explain the associated fees to our children (to ensure they understand money and the value of services). And by doing so will we drive a generation of children that are going to view paying a monthly fee (for the storage of their money) as a normal occurrence. Therefore the debate in a few years’ time as to whether it is acceptable to have charged based accounts will not be a debate at all, but will just be acceptable.
Secondly, are the traditional retail banks and building societies missing a trick? I believe there is a gap in the market for pre-paid cards to be offered to children – with the associated parental controls but without the monthly fees. Any large organisation should easily be able to achieve this and linking it to an adult current account would have the added benefit of increasing its current account base. Indeed in an ever increasing competitive current account market gaining customers at 8 who will become financially aware and technologically savvy I wonder what the banks are waiting for….
And finally…... If no fee-less offering comes into the market then perhaps my ‘conspiracy theory’ will ring true – that these children specific pre-paid cards are in fact a stealth way to introduce banking fees as a norm…..