When I was in 8th grade, I really wanted an easy way to purchase things. Using cash meant getting a ride to an ATM or keeping the 
amount I thought I might spend in bills at my house. Neither of those options seemed convenient or safe. So after researching for a while, I discovered the Visa Buxx card. Luckily, I realized what a huge ripoff it was before I signed up.
What is the Visa Buxx Card?
The Visa Buxx card works like a credit card, but without the line of credit. Your parents put money in an account. When you swipe the card, the purchase is paid for with this money. Instead of receiving a bill every month, purchases are subtracted from your account balance as you make them. You also do not build credit this way. Most banks let you use it as an ATM card, so you can withdraw cash when you need it.
Why’s It a Bad Deal:
The biggest problem is the amount of fees. I expected a fee if you used an ATM that wasn’t owned by your bank, but I was not expecting complete BS fees.
Examples of fees charged: (Note: Each bank that offers the card has their own fees, but here is a general overview.)
- $10.00 just to open the account!
- $0.50 to $2.50 to put more money on the account
- $5.00 for a new card when the one you have expires (all cards expire after a few years)
- $2.00 to $10.00 to receive paper statements. I’m a big fan of online banking, but there’s absolutely no reason to charge this much for a piece of paper.
- $0.50 to call customer service more than twice in a month. This appears to be charged even if you’re just checking the balance.
I wish I could have been there when the fine print for this thing was written. One Visa Buxx provider (Payjr) claims it doesn’t charge an activation fee. Instead, they charge an “Enrollment Fee of $9.95″. Yep, totally not the same thing. WTF were they thinking? But wait! It gets better…You also (or your parents) are charged $4.95 a month as a “Monthly Service Fee”.
Other Problems
The fees are bad enough, but there are more disadvantages.
The card is only offered by the following banks:
If none of these banks have an ATM near you, you’ll be paying a few bucks everytime you withdraw cash from an ATM. Plus if you or your parents don’t already have an account at one of these institutstions, you’ll pay more for having a card through them. Notice that 2 of the companies require you to have an existing account with them before you can sign up.
The whole system is designed to keep you reliant on your parents. PayJr has the option of letting parents pay you for chores, which I suppose could be useful, but not enough to spend 4.95 a month on. And if my parents were going to take that out of my allowance, I’d rather they just pay me in cash or a check and deal with the inconvenience.
Even worse,there’s no easy way for you to add your own money unless you give it to your parents. Which begs the question “What’s the point?”. One provider (US Bank) allows you to direct deposit your paycheck to the account, but I’d prefer to not have my income stuck on one piece of plastic.
It seems off that Visa, a company who makes money by charging interest on credit accounts, is so interested in helping young people “budget” and achieve “independence”. They know damn well that a kid is going to like swiping a piece of plastic to get stuff they want. And I’d bet that anyone who receives a Buxx card is likely to get a Visa branded credit card when they turn 18. I can imagine the board room meeting for the card:
“Well, we can’t legally offer credit cards to 13 year olds, but damn it, we’re going to make money off of them!
“Wow that is f!@#@#! genius. We’re going to be rich…er than we already are!”
Better Options Already Exist
Almost all checking accounts come with the option of receiving a debit card. Most student checking accounts have few if any fees. And they don’t require large minimum balances. Plus, checking accounts encourage the use of a check book, something that appears to be missing from Visa Buxx.
Even the biggest con of a checking account, overdraft fees, can teach a lesson to young people. I know getting hit with an overdraft fee taught me to manage my money more carefully. Most Visa Buxx banks “only” charge $10-$15 dollars for an overdraft. This doesn’t pack quite the same punch.
Any credit card company will let minors be added their parents’ account. While 13 or 14 might be a little young for this, a 16 old being adding to the family’s card used for gasoline or emergencies seems reasonable.
Overall, I just don’t see where the Visa Buxx card fits. The only situations I could recommend in it would be
a) You know you aren’t responsible enough to handle a checking account or credit card.
b) Your parents think you aren’t responsible enough to handle a checking account or credit card.
c) Your bank or credit card company won’t issue a debit/credit card in your name because of your age. Some credit unions won’t distribute debit cards unless the individual is 18 and some credit card companies want you to be at least 15 or 16.
d) You are a sick person who enjoys spending money to access your own money!
If none of those apply to you, skip the Visa Buxx card (and other prepaid cards). Just open a checking account and ask for a debit card.
{ 8 comments… read them below or add one }
Thank you for writing the post but I would urge you to consider the fees associated with a checking account. Studies show that the overdraft fees cost teens much more than you are thinking. Especially now, with the CARD Act, fees on checking will be going up. The back-end costs of an account are the same for a bank or prepaid card, the banks have to make money some how, likewise with the prepaid providers. Checking fees will be going up and teens can no longer get a credit card co-signed or issued by their parents due to the new legislation. Overall, the buxx card is a much better option for teens and parents.
So far, I see no indications that checking accounts will become more expensive. Most banks currently offer no fee checking accounts for high school and college students; I see no reason for that to suddenly change.
Actually, teens can still be added to their parents credit card account. The new law does not prevent this.
The Buxx card is not a better option. It charges way too many fees and teens would be better served by opening a checking account.
Things may have changed quite a bit since I was a teenager, so forgive me if I’m posting something that doesn’t reflect current reality.
I distinctly remember having this same problem as a teen. In fact, I think I remember the Visa Buxx card being rolled out for the first time right around this time. I never got it, specifically for the problems mentioned in this article — too expensive, too many fees, etc.
However, the problem I ran into was that my bank wouldn’t let me sign up for a checking account. They said I had to be 18 because a check is a “legally binding document” and that minors were not allowed to sign such documents and have them be binding. The bank officer said that the only way a minor could get a checking account was if they became an emancipated minor (which brings in a whole slew of issues), and going through all that trouble just to get a darn checking account was not worth it.
I remember being pretty annoyed because I had an ATM card linked to a savings account, but no real way to buy things online because I didn’t have a Visa/MC branded card. The ATM card let me get cash if I was out and about, but that didn’t solve the problem of online purchases.
I ended up finding a Visa Buxx-like card that didn’t have any of the fees and went with that until I turned 18 and opened a checking account a few weeks after my birthday.
Have things changed? Maybe you need a parent to co-sign for the account? I think checking accounts should be valid for any person at any age, personally, as you’ll learn pretty fast what happens if you bounce a check or try to overspend with a debit card. In fact, it would probably be better if you did have to have a parent co-sign the account so that they would ensure you don’t make a mistake that ends up costing you too much money while you’re only 16 or 17. Better to have some training wheels to start.
Yes, all minors (unless you’re emancipated, like you mentioned) need to have a parent (or someone 18) to co-sign for the account. My checking account is just like a regular joint account that a married couple would have, except in my case it has my dad’s name instead of my wife’s.
Some banks do seem to have odd policies for teenagers. I have a friend whose credit union won’t give her a debit card until she turns 18. Doesn’t make any sense when there are plenty of banks that do allow minors to have debit cards.
Not too bad– While I normally bank with Pentagon Federal Credit Union, I find the VISA buxx from Navy Federal Credit great for my 13 yo who will be traveling to Australia. It certainly has less costs than you mentioned, and more importantly, it carries significantly less risk than giving my son cash or a credit card. My 19-yo is very responsible and has a full platinum VISA, probably the best no-fee credit card available, which is issued by Pentagon Federal Credit Union. Credit unions nearly always offer a better deal. Here are NFCU’s fees as of 5/26/11– unfortunately, not everyone will fit in its world-wide field of membership.
Charges and Fees Fee Name Amount
Inactive Fee (after 6 consecutive months of no transactions, the card will be charged $1.00 per month until the balance is depleted or you make another transaction) $1.00 per month
Visa/PLUS Network ATM domestic and foreign cash withdrawal and balance inquiry (The terminal owner may charge additional fees and “surcharges” for ATM transactions) $1.00 per transaction
Lost/Stolen or Replacement Fee $5.00
Express Delivery Fee $5.00
Non-Sufficient Funds Fee $10.00
Transactions made in foreign/international countries in foreign currency 1.0%
Transactions made in foreign/international countries in U.S. dollars 0.8%
Foreign/International Transactions.
I have a Visa Buxx card issued to me by my parents, and the things I’ve read in this article is completely wrong except for the ATM fees. Any bank will charge you 1.50-2.50 for using an ATM that isn’t associated with your bank. The only thing wrong with it is the fact that the direct deposit takes forever. Besides that I LOVE my Visa Buxx Card, and I strongly recommend it to everyone that doesn’t want to pay 500 a month on overdraft fees.
@Grace, keep in mind I wrote this article over 18 months ago. The fees may have changed, but at the time they were what I found when searching the various banks’ websites. I just scanned Visa’s website again, and it still appears that a few of the banks issuing the cards charge either a one time setup fee or a monthly fee. I’m not sure how this is “completely wrong”. PayJr’s website also says that parents will be charged anywhere from $.50 to $2.50 to load the card.
My main point is just that a joint checking account provides all the benefits the Visa Buxx card does and usually provides them at a cheaper cost. Someone spending $500 a month in overdraft fees needs to seriously re-evaluate their financial situation, regardless of what method they’re using to pay. You can also tell your bank to not allow overdrafts if you wish.
Navy Federal Credit Union (NFCU) charges zero fees for everything except cash at an ATM. Parent just needs a NFCU membership and to fund from a NFCU account. I just told my kids no cash from an ATM. While perhaps not perfect, it meets the needs pretty well of a kid not yet ready for a checking account.