Kids' money card slammed
A $9.95 a month electronic money card for children, which is being marketed as a way for youngsters to learn financial literacy, has been slammed as exploitative.
The Fundzi card is being billed as a "safe" alternative to cash for kids, but the costs add up to at least $119.40 a year compared with free children's banking and ATM card packages offered by the main banks. The card also attracts a fee of 50c per transaction after 12 free transactions and three free declined transactions.
That Fundzi cost does not include forgone interest either. While most big banks pay interest on children's deposits of 2.25%, any money loaded on to Fundzi's "prepay" cards is kept in a National Bank account for Fundzi, which keeps the interest for itself.
Gary Alway from Christmas savings card provider Hampsta said he had been contacted by retailers concerned about the cost of Fundzi, which is building up to a launch early next year.
There had also been bemusement, Alway said, that Fundzi is linking its use to an as-yet-unspecified programme of financial literacy training for children despite the cost of the cards.
"It is obviously not aimed at people with any financial literacy with charges of $120 a year for the service," he said.
But Fundzi, owned by Australasian loyalty and prepaid card provider U-Dynamics ANZ Limited (not related to ANZ National bank), hit back saying the monthly price tag was not a large price to pay for a service that mixed education with a spending tool.
"It's not simply an eftpos card. It's a financial literacy learning tool," a spokesman said. That's illustrated by the statement on the Fundzi website: "As parents we could see the need for a handy, safe and secure cash alternative for kids. Also from talking to teachers and other parents we saw that if we could help teach kids good financial skills at the same time then we would be doing more than providing a service – we would be setting kids up for life."
A series of modules had been created based on the NZ Qualifications Authority financial literacy curriculum. The card also offers monitoring and the ability to block certain purchases.
Fundzi hopes schools will market its cards. Five dollars from an initial $9.95 card purchase fee would go to the child's nominated school. It said some principals had expressed interest in the cards, which are being tested in a pilot with the children of Fundzi staff, friends and family.
But Alway said: "No school would back this."
Fundzi's website says forgone interest would be compensated through currently unspecified rewards and retail discounts.
A quick survey of the big banks shows a range of cheaper options.
Each bank has a different stated age for child customers to have eftpos cards with no transaction costs. ANZ for example, allows kids as young as seven to have them, provided parents indemnify the bank against misuse of the card. Kiwibank will allow kids as young as 10 to have a card, while BNZ has 13 as its starting age.
On its website, Fundzi says for "the price of a couple of coffees a month kids get the benefits of a secure prepay card and a lifetime of financial skills."
However, Alway said it was more like a tax on pocket money.
The Fundzi website describes it as "the easy way to set and manage chores and pocket money. You can easily set up your chore list online – once your parent signs them off the payment money will be available on the card".
- © Fairfax NZ News