paypal for parents and teens

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If you parent a tech-savvy tween or a teen, you've probably spent more time than you'd like typing in either your paypal info or your credit card number each time they want to purchase a game or other item online.

In our household, in addition to that annoyance, there's also the fact that our kids are terrible at keeping track of their own cash, and don't have easy access to a bank to deposit checks they might receive from family. Like many parents, we've mostly operated on a "Bank of Mom & Dad" principle...we keep track of how much of their money we've got, and add to/deduct from that when they get money or want us to buy something for them. It's a hassle, because none of us enjoy the record-keeping or arguing over whether or not we paid for their purchase last week.

So when I saw last week that PayPal was now offering ""student accounts":https://www.paypal.com/student/" for teenagers (ages 13 and up), I was intrigued. After reading the fine print, I couldn't really see a downside, so I opened accounts for both of the boys.

The way it works is that the parent sets up the account, and then decides what level of access the kid gets, and how much notification the parent receives. Here's the list of options:

student account permissions

We have a pretty high degree of trust in our kids, so we set very few restrictions--that's something we can change later if the trust turns out not be warranted. But there's very little risk involved here--they can't overdraw the account because PayPal will reject any transaction that doesn't have sufficient funds to cover it.

I then transferred into their accounts the money we'd been holding for them in our bank account--back allowance, checks they'd gotten from family--essentially closing out their accounts with the "Bank of Mom & Dad."

PayPal also makes it easy to set up an automatic payment into their accounts from ours, so rather than keeping track of their allowances, I'm now having the agreed-upon amount automatically deposited into their account. I can change that at any time, but having it set up as the default means we don't have to remember if they got their money in any given week.

Even better, PayPal offers the option of a debit card in your kid's name, which allows them to purchase things at a store, and to withdraw cash from an ATM. They charge a $1 fee for ATM withdrawals, but no charge for purchases with the debit card. (And, if they want cash without a fee, they can always transfer some money back to our account, and get cash from us in return.) Again, since PayPal won't approve a transaction if there aren't sufficient funds, there's no risk of them overdrawing or running up debt.

Lane tested his new debit card at a local convenience store yesterday, and it worked like a charm. He's also now able to transfer his Second Life earnings directly to his own PayPal account.

All in all, I'm very impressed with how well this service seems to work, and how nicely it allows kids to have independence in managing their own money while still providing parents with oversight (more oversight, really, than if they were simply using cash). It's only been a week, but we're all giving this a big thumbs-up.

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This page contains a single entry published on November 8, 2009 11:36 AM.

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