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Prepaid Debit Card Pushed At Girl Scouts Is The Wrong Kind Of Financial Education

White piggy bank with a white backgroundI was a Girl Scout when I was younger, so when the organization announced it would add financial literacy badges in 2011, I was thrilled.

It showed that this 101-year-old institution could adapt to the changing world and keep relevant.

But a recent decision by the Girl Scouts Hornets’ Nest Council, which covers 16,000 girls in North and South Carolina, has made me think twice about my enthusiasm.

This council partnered with SpendSmart Payments Co., a San Diego-based debit card company, which plans to provide the Girl Scouts a financial literacy education program.

That sounds nice, except SpendSmart also expects to pitch its expensive prepaid debit card to scouts 13 and older. In effect, SpendSmart has an open invitation to shove a product that doesn’t promote the kind of financial literacy teens should learn in the face of thousands of young people.

Most prepaid cards are a worse option than a typical bank account, and this is no exception. There are lots of fees: 75 cents to load money from a checking or savings account; $2.95 if it’s coming from a debit or credit card. ATM withdrawals will cost you $1.50 each, and balance inquiries come with a 50-cent charge.

Don’t use the card? You’ll be docked $3 for 30 days of inactivity.

And then there’s the $3.95 monthly fee, which comes to just under $50 a year.

Now, there are some prepaid debit cards that are worth the hassle, especially for people for whom bank accounts can be expensive. But why would a 13-year-old need to pay $50 for someone else to keep their money, especially when many banks offer free accounts to kids?

How is that sound financial literacy?

It’s not, nor is a lot of other financial advice that SpendSmart doles out through another of its operations, (yes, that’s really what it’s called).

Through this site, SpendSmart offers a free financial literacy ebook (which demands you enter an email address, after which they spam you). In that ebook, SpendSmart talks about teaching your kid how to handle money without “exposing them to the risks associated with cash.”

What risk?

That it’s not going to generate fees for SpendSmart, which is a publicly traded company? According to the ebook, “Handing cash to your teens will not teach them positive habits because of cash’s inherent lack of track-ability [sic]. It’s inability to be tracked means that personal responsibility and accountability for purchases is low.”

I get it. SpendSmart thinks the ability to monitor spending is a good feature. But that’s a feature for the parents (and can be replicated with a bank debit card).

Only a prepaid debit card company would write such a thing and call it personal finance education. Learning to use cash is a key part of being responsible with money, and many budget programs involve using cash instead of plastic because it’s harder to part with paper money, and when it’s gone, it’s gone.

I wanted to know the details of this arrangement – maybe this group of Girl Scouts is cash-strapped and getting a cut – but after much back and forth, the council declined an interview.

I’m going to err on the side of the Girl Scouts’ long, successful history of helping young women and guess this wasn’t an evil move, just a stupid one.

And it’s one that doesn’t even seem necessary considering the national office already has a financial empowerment program for girls K-12, and a good one that has obviously been well-thought-out.

The best thing to happen here would be for the Hornets’ Nest Council to reconsider its decision and cancel the partnership. SpendSmart told a Kansas City Star columnist it hopes the partnership will serve as a model for other Girl Scout councils around the country.

I sure hope not.

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  1. Mojave Jack said:
    on January 7th at 12:51 pm

    We’ve become too much of an “I want it now and I’ll use credit to get it” society and it seems that SpendSmart just wants to indoctrinate young women into this perilous mindset.

    Brings a whole new slant to Proverbs 22:6, “Start children off on the way they should go, and even when they are old they will not turn from it. ”

    What ever happened to “youth accounts?” About a dozen years back when my son started saving, he got a 1% interest bonus for having a savings account and being under 18. Now THAT taught financial responsibility, not this bogus scheme to drain nickels and dimes from kids who can hardly afford it!