Cash allowances best for kids

By Jeremy M. Simon

While your kids may be growing up in a world that is very different from when you were a youngster, there is one financial trend that continues to hang on: the allowance.

The amount of kids who get an allowance varies depending on what data you consider.  Market research firm Yankelovich Partners found that about 58 percent of American children receive a regular allowance, although other studies put that number closer to one-third of kids.

If you want your kids to learn how to use money responsibly, experts still recommend the weekly allowance.  Instead of just buying your child whatever he or she wants or allowing them to charge purchases on your credit card, a cash allowance gives them the opportunity to develop their money management skills.

But what about online purchases, like downloadable music, that require a credit card or debit card for purchase?  How can a kid with a cash allowance money buy a song off iTunes if that's what they want to spend their money on?

Rather than just handing over your plastic or making your son or daughter an authorized user on your credit card account, experts say an allowance can still come into play.  In such cases, kids can pay their parents in cash for the purchase, which the adult may then put on a credit card.

Experts say that cash allowances are best for kids, since plastic tends to not seem real to young consumers.  They don't see the differences between a credit card, prepaid card and a debit card.

To comment on this story, write Editors@CreditCards.com.

More credit card news.

Published: May 14, 2007

	Three most recent Student credit cards, young credit stories: Rate survey: Credit card APRs remain in holding pattern – Interest rates on new credit card offers remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report ... Rate survey: Credit card APRs unchanged as holidays near – Interest rates on new credit card offers remained unchanged this week as banks took their traditional Thanksgiving break from changing rates, according to the CreditCards.com Weekly Credit Card Rate Report ... Rate survey: Credit card interest rates hold steady – The average interest rate on a new credit card offer stayed static this week, according to the CreditCards.com Weekly Credit Card Rate Report. However, that doesn't mean that all of the nation's largest credit card issuers were sitting on their hands ...

	CreditCards.com's newsletter Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!