A prepaid card can help parents manage a teenager's allowance. It can also help them monitor how and where their child is spending money. And the best cards can even help parents teach children how to manage money. We look at one potential option that does all three in this FamZoo review.
Several years ago I met the founder of FamZoo, Bill Dwight. We attend FinCon every year, a personal finance blogging conference. I've always been impressed when talking to Bill. He seems to have a genuine desire to help parents teach children responsible money habits. Let's see how FamZoo can help accomplish this goal.
What is FamZoo
Most think of FamZoo as a prepaid debit card for teens and their families. While that's true, it's really more than that. FamZoo describes itself as a “virtual family bank.” The parent is the “banker” and the kids are the “customers.”
FamZoo gives parents the tools to manage their kids' money. It does so through what it calls IOU accounts and through prepaid cards. These tools allow you to set the “rules” of your family bank, including–
- Automated allowances
- Rewards for chores
- Withholding for saving or giving
- Penalties for missed work
- Parent-paid interest on savings
- Expense sharing
- Matching contributions
- Budgets
- Loans
How FamZoo Works
You can think of FamZoo as a combination of an app that manages what FamZoo calls IOU Accounts and a bank account (with prepaid cards if you choose). You can choose to just use the IOU Accounts through the app, just the prepaid cards, or both.
IOU Accounts
The FamZoo app enables you to set up virtual accounts for each of your children. Through these accounts, you can pay your child an allowance, give them spending money, encourage saving and giving, and even take money away if they fail to do their chores.
The IOU Accounts are not connected to a bank. Parents are the bank. If your child gets a $20 birthday gift, they give the money to you and you credit their IOU Account. If they want to buy something that costs $10, you pay for it however you wish (e.g., cash, credit card, check), and subtract it from their virtual account.
You can automate IOU Account transactions, such as a weekly allowance. If managing the cash yourself isn't appealing, FamZoo offers prepaid debit cards.
FamZoo Prepaid Debit Card
Famzoo also offers prepaid debit cards. These cards are linked to an FDIC-insured bank account. Apparent sets up the primary funding card in his or her name. Both parents can have a prepaid card if they so choose. Then, each child gets his or her own prepaid debit card at the parent's discretion.
For children under the age of 13, the card is in the parent's name. For children 13 and older, the prepaid debit card is in their own name. In either case, the parents have complete control over all of the prepaid debit cards.
Related: The Best Prepaid Debit Cards
The parent funds his or her prepaid debit card. Once funded, they can transfer money at no cost between all of the family's prepaid debit cards. Each family member can have one or multiple cards. For example, a pair of could set up separate cards for child spending, savings, and giving.
Parents have complete control of each debit card. When a parent logs into the FamZoo dashboard, for example, they can see all balances and transactions of each prepaid debit card. In contrast, when a child walks into his or her FamZoo account, the only see their own balances and transactions.
FamZoo Fees
A FamZoo account costs $5.99 a month. That fee covers the entire family. If you prepay, the monthly cost goes down by as much as 58%.
| You Pay | Which Equals | Why Pre-Pay? |
|---|---|---|
| $25.99 for 6 months | $4.33 per month | You save $9.95 or 27% |
| $39.99 for 12 months | $3.33 per month | You save $31.89 or 44% |
| $59.99 for 24 months | $2.50 per month | You save $83.77 or 58% |
There are some additional fees for certain transactions. For example, there are fees for ATM withdrawals at ATMs outside of FamZoo's nationwide network. There are also fees for transactions occurring outside of the U.S. By and large, however, these fees are easy to avoid.
FamZoo Features
FamZoo offers a host of features to help parents and children manage money.
Family Features
- Parent/Child Roles: Parents have complete control of all accounts, while children only see their accounts.
- Instant Transfers: Parents can move money between cards instantly and without fees.
- Scheduled Transfers: Parents can automate recurring transactions such as allowance.
- Activity Alerts: Both parents and children can receive card activity and balance alerts.
- Lock/Unlock Cards: Parents can turn cards off and on.
- Money Requests: Parents can automate and track requests for money.
- Reimbursements: Parents can automate and track reimbursement of family expenses.
Financial Education
- Payment Checklists: Parents can teach children the relationship between money and work. They can schedule chores and odd jobs and tie them to rewards or penalties.
- Spend, Save and Give Accounts: Parents can order additional cards for each child. Each card can be given a unique purpose, such as spending, giving and saving.
- Payment Splits: Parents can split payments between multiple accounts.
- Parent-Paid Interest: Parents can set up automatic interest to paid to their child's account to encourage saving.
- Savings Goals: Children can set and track savings goals.
- Family Billing: Automatically charge a child's account for their share of a family expense.
- Informal Loan Tracking: If you lend money to your child, track the loan and the progress of payments.
How the FamZoo Prepaid Card Measures Up
FamZoo is one of only a few prepaid debit cards designed specifically for families with children. The other contenders in this category are Greenlight, BusyKid and Current. All offer similar features and have similar costs. FamZoo is ideal for larger families in that the cost covers up to 4 prepaid debit cards.
In terms of features, FamZoo's app offers some of the features we believe to be most important:
- Activity alerts
- Lock/Unlock the card
- Automated allowance
- Pay for chores
That being said, some of the alternatives are worth serious consideration.
FamZoo Alternatives
The primary alternative worth considering is the Greenlight card. Greenlight is our editor's pick in this category for several reasons. First, it costs as little as $4.99 a month for up to five kids. Second, it's available for children as young as 6 (FamZoo's age cut-off is 13, although parents get what FamZoo calls “on-behalf-of” cards to use for their young children).
Finally, Greenlight offers the most features. In addition to the FamZoo features mentioned above, Greenlight also offers the following:
- Store-specific spend controls (prohibit use of the debit card at specific retailers)
- Save the change with Round Ups
- ATM parental controls
- Investing features
Current is more of a teen banking product, but could be useful for teens with a job. It doesn't come with parental controls.
Finally, BusyKid is worth considering, particularly if you have just one child. The cost is $19.99/year for one BusyKid Prepaid Spend Card. The downside to BusyKid is that it doesn't come with robust parental controls. It's limited primarily to parental approval for each transaction.
