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Prepaid cards marketed to teenage users Last month, MasterCard introduced a prepaid debit card featuring R&B crooner Usher and this month will unveil a card with cartoon character Hello Kitty. Critics say the cards promote spending and keep users from building credit history. "It's inexcusable they are being marketed to teens, especially younger teens," says Ken McEldowney, executive director of Consumer Action. Credit-card companies say prepaid cards cultivate responsible spending habits among teens who can't get checking and credit accounts. Despite the fickle teenage market, credit-card companies put up with the uncertainty to get a piece of the $175 billion that teens spent last year, according to Teenage Research Unlimited. What's more, as much as 17 percent of balances on loadable and non-reloadable cards typically go unused, says David Robertson, publisher of payment industry newsletter The Nilson Report. Then there are the fees companies charge. The Usher card costs $15 to buy, $4.95 a month to maintain, and $3.95 to replenish when dollars run low. But Bill Mathis, MasterCard's senior vice president of member relations, says the maintenance fee is fair because people can have their paychecks deposited directly to the cards and use them at ATMs.
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