You’ve already heard me harp on the virtues of aggressive parent-paid interest. (If not, see here.) It’s my favorite technique for getting kids fired up about saving and thinking twice about spending: “Look at that sweet interest deposit I just got on my card! I’m going to build up my balance so I can earn even more.” Music to my ears.
I decided to run some numbers on our family finance site today to see just how much interest parents are shelling out in a typical month.
Last month, kids who received parent paid interest on their prepaid cards earned an average of $3.74. Nice! Infinitely more motivating than a traditional savings account.
One kid raked in a whopping $60. How? The kid’s parents offer a super sweet deal: 1% of the the current card balance per week capped at a maximum payout of $12. Now that’s aggressive! The kid bagged 5 maximum payments in the month because September had 5 Saturdays this year. Bonus!
OK, so $60 a month is over the top for most families, but $3.74 isn’t.
That steady drumbeat of encouraging text messages just might cement a lifelong savings habit.
Worth a try, don’t you think?
Here’s the discouraging news: only 4.3% of the kids using our cards in September earned parent-paid interest.
So, here I am harping on it again. Time to step up and shell out, parents.
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