How To Use Prepaid Credit Cards? When it comes to teaching teens about money, there is nothing quite as valuable as real life experience. While parents can lecture all they want about the value of money and the power of investing, teens are unlikely to pay much attention unless it has a direct impact on their own life. One of the best ways to teach teenagers about both money and credit cards is by giving them their own prepaid credit card.

How To Use Prepaid Credit Cards?

What Is a Credit Card?

A prepaid credit card works much like a debit card, in that the holder of the card cannot spend more than the amount on the card. This quickly teaches teenagers to budget their money wisely. After all, if they blow the funds on the card on the first thing they see, there will be no more money to fall back on.

Also Read: How To Use Cash Advances Properly?

What Is a Prepaid Credit Card?

There are a number of prepaid credit cards designed especially for teenagers. If you are unsure if your bank offers such a card, be sure to ask. When the card is first issued, the parent sets the amount on the card. Then it is up to the parent to add money to the card after it has been used.

It may be a good idea for parents to forgive a one time splurge and refill the card with a small amount. However, a good conversation about finances is also in order. It should be made clear that the parent will not be there to ride to the rescue should a second slip up occur.

Importance of a Prepaid Credit Card

These prepaid credit cards are an excellent way to teach responsibility to teenagers and young people, and with the proliferation of credit cards on college campuses today. It has never been more important to teach kids about how credit and credit cards work. What parents do now to teach their children and teenagers about money today can make a huge difference in their adult lives. The teen who learns a hard lesson about the limitations of credit cards today will be less likely to overspend and get into debt after he or she gets out in the real world.

Understand Capital Gain and Losses

Capital gains and losses are further broken down into long term and short term varieties. Assets held for less than a year are taxed at the short term capital gain rate. While assets held for longer than a year are subject to the more favorable long term capital gains rate.

Capital Gain Liability

While the government generally wants a piece of every capital gain. It is not as eager to share in capital losses incurred by taxpayers. Taxpayers are entitled to deduct losses of only $3,000 per year, regardless of the amount of the actual loss. As always, it is a good idea to check with a qualified tax preparer or accountant when determining your true level of capital gain liability.


Dealing with taxes on capital gains may not be any fun, but it sure beats the alternative. Ask any investor if he or she would rather have a capital gain and a tax or a capital loss, and the answer will quickly become clear.


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