Updated: May 3, 2013 12:14PM
Originally published: August 7, 2001
If you have a high school graduate in your family, the financial services industry is targeting him or her with some innovative products that are both constructive and instructive.
A few are worth a closer look--and could be the perfect graduation gift. It should come as no surprise when your teen is targeted by credit card solicitations. Usually, my best advice is to throw them in the trash--the solicitations, that is. Adults find it hard enough to resist the enticing credit line, much less teens who make do on part-time jobs or allowances.
Now there’s a neat new product--the PocketCard. It’s a Visa debit card that is designed for teens (or employees, or anyone else whose spending you want to monitor).
This new product is a combination of the best features of a secured card (with a credit limit backed by an interest-bearing deposit) and a debit card (automatically subtracts purchases from your account). But this product goes further by offering instant funding, reporting and control. PocketCard, based in suburban Gurnee, has applied for a patent on the technology which allows money to be transferred into the account using the Internet or any touch tone telephone.
Up to $500 per 7-day period can be transferred into a child’s account, (or up to $1,000 into a business account). Only the amount of money in the account can be spent by the teen. The parent receives an instant e-mail alert, allowing them to track where and how the money is spent, or cash withdrawn (up to $50 per day or $100 per week). That makes for some interesting remote control over a teen’s finances. For more information and to apply, go to www.pocketcard.com. Here’s another new alternative designed to introduce teens to online banking while preserving some control over spending. DoughNET.com has launched an ATM card designed for teens to withdraw money from their own, personal online bank accounts. They can either withdraw cash from ATMs or use the online bank account to shop online at more than 80 retailers including CDNOW, BarnesandNoble.com and Fogdog Sports. DoughNET has also applied for a patent on the technology which allows teens to create a personal online bank account and manage their own spending. The balance in the account is kept in real time, and 5 percent interest is paid on balances. DoughNET has one more interesting feature: It promises to donate $5 for every online donation of $10 or more a member makes to one of nine featured nonprofits, including Rainforest Alliance and Rock the Vote. (If you don’t know, ask any teen.) To view the product or get more information on opening an account as a gift, go to www.DoughNET.com. Finally, Charles Schwab has created a new “Gift Package” designed to introduce young adults (over age 18) to the challenges and opportunities of investing.
This, too, is an online approach to financial smarts. It includes an interactive CD-ROM tutorial, a 12-month subscription to SmartMoney magazine, a complimentary trade commission coupon, and access to a special Web site for beginning investors, plus a copy of Schwab’s “Guide to Financial Independence.”
The actual gift package costs $99--but in order to activate the program, the giver must include a check for $500 (or securities worth at least $500) to serve as the initial investment for the account. Then the new investor can add more money (a good use for graduation cash) to the account--either as part of a regular monthly investment program, or as cash becomes available. Schwab has done everything possible to make this the easiest gift to give.
The company provides a pre-paid Federal Express envelope in the package in case the giver (read grandparent) cannot present the gift in person. For more information go to www.schwabgift.com or call (800) 292-9944. All of these gifts make smart financial sense.
They empower teens to manage and grow their money in a responsible way, using the latest technology. These gift ideas have one other thing in common: They make you--the giver--look cool! And that’s the Savage Truth.
Terry Savage is a registered investment adviser for stocks and commodities and is on the board of directors of McDonald’s Corp. and Pennzoil-Quaker State Co. Send questions via e-mail at firstname.lastname@example.org. Her third book, The Savage Truth on Money, recently was published by John Wiley & Sons Inc.