51.8% of Spotify’s attempts to bill kids on FamZoo prepaid cards failed in the last 90 days. Yep. Over half. Yikes.
The reason for the vast majority of those failed attempts? Insufficient funds on the card.
Here are the full stats for the Spotify billing attempts:
| 48.2% | Successfully billed. Golf clap. |
| 43.7% | Billed amount exceeds card balance. |
| 3.0% | Billed to lost card. |
| 3.0% | Incorrect card expiration date entered. |
| 1.2% | Incorrect card security code entered. |
| 0.9% | Failed address verification. |
By comparison, in the same 90 days, 98.4% of Chipotle purchases were successful. Hmmm.
Clearly, lots of kids aren’t ready to plan ahead (beyond their next burrito) and responsibly handle a recurring billing arrangement.
But who cares? FamZoo prepaid cards don’t charge any overdraft fees. What’s the harm?
The harm is the habit.
Kids who develop a habit of missing online subscription payments now might be cavalier about missing regular rent payments later. Or student loan payments. Or credit card payments.
That means late fees, mounting debt, and tanking credit scores.
All bad.
So, make sure you’re nipping your kid’s bad payment habit at the bud. Here’s how:
- Add responsibility for a recurring payment. Put your kid in charge of handling a regular monthly payment — Spotify, Netflix, a share of the family data plan. Don’t forget to increase your child’s budget based allowance to accommodate the increased fiscal responsibility. Remind your child to maintain a buffer on the card to safely handle the billing when it hits.
- Assess a penalty for misses. Review your child’s transactions each month or set up real-time activity alerts so you know when payments have failed. When they do, tack on a penalty. Consider it an overdraft fee from the Bank of Mom or Dad. Missed payments need to hurt.
- Insist on a proven track record. Is your teen claiming readiness for a checking account or access to a credit card? Your teen will need to prove it first. Six straight months with zero subscription payment failures feels like a good prerequisite.
Remember, a spotty Spotify record now might mean a spotty credit score later. Make sure your kid faces the music early.
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While I think the article is a good reminder and fantastic advice when it comes to managing the finances of your children, I think that it's important to educate them how to do this and tackle the issues themselves rather than handling the problems on their behalf.
ReplyDeleteAgreed - the intent is to make the kids aware of what is happening, hold them accountable, and insist they fix it themselves before moving to the next level. What we see in our FamZoo data is that neither parent nor child is paying attention to these declines, which means no education is even occurring on the topic.
ReplyDelete