Visa Hopes to Capture Hot Teen Market With New ‘Reloadable’ Card

Visa USA has come up with a new card aimed at capturing a growing market: teenagers.

Visa is pitching its “reloadable” Buxx card as “safer, but still as convenient as cash” for kids 13 to 17. Perhaps too convenient, consumer advocates cautioned.

The card works like a reusable, prepaid phone card and can be used for purchases anywhere Visa is accepted, including automated teller machines and the Internet.

Credit card companies know well that the nation’s 30 million teenagers constitute a valuable market, already spending an estimated $150 billion a year. Researchers say these kids will probably outspend their profligate parents--and that expectation is making consumer advocates uneasy about Visa’s newest product.

Visa, the bank-owned association that runs that nation’s largest credit card system, said parents will set a spending limit for their teen’s Buxx card and prepay that amount into a special account. The parents then can monitor the child’s spending online or via a toll-free number. They will be able to “reload” the card with more cash as needed.

As part of the issuing process, Visa said it’s asking parents to walk their teens through an online financial skills test “to encourage family dialogue about money management and financial responsibility.”

Consumer advocates understand that there could be value in giving children a means of buying online or off without having to borrow Dad’s credit card. But they also have concerns that American children, like their parents, could be encouraged to spend their way into trouble.

“Magic money,” was the reaction from Steve Rhode, president of MyVesta.org credit counseling service in Rockville, Md., and co-author of “Get Out of Debt.”

Rhode suggests that a credit card for teenagers “could be a fantastic teaching tool” if used properly. But he worries that kids will only get half a lesson.

“While it’s beneficial for parents to work with children as young as possible on saving, checking and credit, it’s not effective to have parents make deposits in accounts and have kids spend the money,” Rhode said. “All you’re doing is educating them how to spend.”

What’s missing in this equation, he adds, is what he calls “the critical part” of having kids earn their own money and learn to make decisions on how best to use it, including for savings.

Frank Torres, legislative counsel for Consumers Union, the advocacy group that publishes Consumer Reports magazine, said “Visa and other credit card companies are not altruistic organizations” and suggested that products such as Buxx are “designed to get the young people of this country addicted to plastic.”

Torres also expressed concerns about the privacy of children signed up for the new card.

“It will give Visa a wealth of information about their spending patterns,” Torres said.