American Express (Stock Quote: AXP) has been getting increasingly aggressive about targeting younger consumers with prepaid credit card deals. Now, they’re aiming at the teenybopper set with a new card called PASS. It’s being offered to teens and their families at $3.95 a month, and it has some potentially helpful — and not so helpful — aspects to the deal.
Amex is heading into the youth credit card market facing some stiff headwinds. While the card giant does have a prepaid credit card for college students (called ZYNC), studies indicate that younger cardholders are having a tough time managing those cards.
According to an April 2009 study by Sallie Mae entitled "How Undergraduate Students Use Credit Cards," the average balance for student cardholders was $3,173, the highest point ever tracked by Sallie Mae. The median balance for college card customers was $1,645 — up from $946 in 2004. And 21% of student cardholders had balances between $3,000 and $7,000.
Against that backdrop, parents may well wonder if their teens actually need a credit card — even a prepaid one. But that’s not stopping American Express, who is acknowledging the potential anxiety parents may have about their teenage children getting a credit card.
But Amex promises full parental controls that should mitigate overspending and allow the card to be disabled for access if lost or stolen.