Academic journal article ABA Banking Journal

New Spending Norm: Teen Debit Cards

Academic journal article ABA Banking Journal

New Spending Norm: Teen Debit Cards

Article excerpt

TEENS ARE THE DEMOGRAPHIC OF CHOICE, as Left and right we have seen the new trends that are specifically marketed towards them. From teenager-versions of popular magazines such as Teen People and Glamour Girl, to specialty stores like American Eagle and Abercrombie and Fitch, the market for 10- to 19-year-olds has proven to be very lucrative.

The teenage population grew from 37 million, or 14.1% of the total population in l995, to 39 million in 1998 with an additional 8% expected by 2008, according to the report Teens Rock by SunTrust Robinson-Humphrey Capital Markets. Teen spending has also increased, with a 25% jump from $122 billion in 1997 to $153 billion in 1999. Even allowances have escalated. On average, teens receive a total of $50 a week in allowance and other handouts while wealthier families' totals are close to $175 a week!

With teens spending most of this on entertainment and clothing, it's no wonder they need to learn how to budget.

A survey by Datamonitor, Online Teen Payments, states that teenagers should not be forgotten in banking strategy. To do so could miss a potential relationship that could be cultivated into something bigger with lifetime growth. One way to start with this process is to provide teen debit cards, as some banks are doing.

Two debit approaches

The EF TravelCard is a MasterCard debit card that is specifically designed for EF Tours, a travel company that operates student learing tours, mainly overseas. The joint venture of FirstDebit Corp., Weston, Mass, and Bank Rhode Island, Providence, provides "a real sense of security" for teens that are travelling or just shopping at their local mall.

According to Robert Bickford, president of FirstDebit, "the teen market is clearly a niche. It's a great opportunity for kids to learn about handling 'plastic,' spending responsibly, and in general learning the ropes of financial responsibility. This card gives parents oversight and control."(Parents set a limit for their child.)

"Two years ago, parents and focus groups were hesitant on the product. …

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