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TheStreet Open House

Cartoons, Twilight Sell Prepaid Cards to Teens

By Bill Hardekopf for LowCards.com.

NEW YORK ( TheStreet) -- With the Kardashian prepaid debit card ancient history -- pulled due to poor sales, negative publicity and high fees -- it's worth noting the Kardashians were not the only "celebrities" being used to promote prepaid debit cards to young adults.

Now we're even seeing cartoon characters.

This month, Myplash started selling Teen Prepaid MasterCards, timing that seems to coincide with the holiday season. Launched by Plastic Cash International, there are almost 100 designs, including cartoon characters, movie characters, athletes and musicians -- So So Happy, Skelanimals, Paul Frank, Emily Strange, Plain White Ts, Rich Boy, Flo Rida, surfer Kassia Meador and, of course, characters from the Twilight movies.

Myplash Twilight gift cards went on sale last summer. The company says it uses this branded content to connect with teens and young adults "in a cool and relevant way."

Fees for the Myplash cards are lower than fees for the Kardashian Kard, but they still add up: The activation fee is $6.95. The monthly fee is $4.95, and the reload fee from a credit or debit card is $4.95 (there is no fee for direct deposit reloads). The ATM transaction fee is $1.50 per withdrawal. There is a $1.95 fee for inactive accounts and a $2 fee for a paper statement. Disputing transactions costs $15 each. Electronic bill pay costs 50 cents per transaction. Contacting a customer service agent will cost $1.50 by email and $1.95 person to person, although the call is free for the first three minutes. Each transfer of money to another Myplash card costs 50 cents. Text message and email alerts are free.

Myplash requires teens up to age 17 to have parental consent for a card, as well as agreement to the terms and conditions.

There is nothing illegal about using cartoon characters to promote a financial product to teens, but it sure bothers me as a parent and seems to cross over the line of what is good taste.

Prepaid cards seem to be trying to fill the void for credit cards for teenagers and young adults that was created by this year's CARD Act consumer protection legislation. These regulations made it difficult for anyone under 21 to get a credit card, but didn't affect the ease with which teens can get prepaid reloadable card.

If you are too young for a credit card, or have poor credit, a prepaid reloadable card is one of your options. You may be much better off getting a debit card with your checking account, because the fees are much lower, but if you do get a prepaid card, make sure you compare fees and find one that reports to credit agencies. Since prepaid cards are primarily marketed to people with little or no credit, damaged credit or young adults, this can help build or rebuild your credit score.

Prepaid reloadable cards look and act like a credit or debit card, including personalization with the name of the user, and they can be used everywhere debit cards are accepted, even for international purchases, and are subject to account holds at gas stations, restaurants, hotels and car rentals, just like debit cards. But the credit limit is set by the amount of the deposit. It is not a loan and does not accrue interest charges. The cards usually carry significant fees such as processing fees, monthly fees, transaction fees and extra ATM fees -- even if you're not a teenager.

-- Reported by Bill Hardekopf of LowCards.com.

Bill Hardekopf is chief executive of LowCards.com, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."

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