Credit Card Firms Aim to Put Plastic in Hands of Kids.

PARENTS need to have a frank talk with their children, as the kids approach puberty. No, it's not what you're thinking. I'm talking plastic.

Children are getting credit cards at ever-younger ages. "Save it for college," I've always advised -- or for after high-school graduation.

But we live in a plastic world. Your teens may not have credit cards, but some of their friends will -- the coolest ones, who spend a lot.

What's more, I've read many a sad story about kids who get their first credit card when they go to college and suddenly run off the tracks. They run up unpayable debt, and wreck their credit reputations for years.

So how should kids make the transition from financial virginity to an experienced plastic spender?

Several companies are betting the parents will start them out with debit cards -- especially the cards being designed for teens.

These new kidcards amount to training wheels. You, the parent, put cash into a special bank account linked to the card. The child uses the card to make a purchase. The payment comes out of the special account, automatically.

Your child has to keep track of the money in the account. When it runs low, the parent puts more money in (or shuts it down, if the child can't manage it).

These cards can't replace the cash your teens need for walking around. But they're useful for kids who get an allowance for buying clothes, books, gasoline and other large purchases.

For now, there are no annual or per-transaction fees, although there are ATM fees for withdrawing cash (and there may be other, incidental fees).

The most popular kidcards will be those with a national brand, like Visa. Young people can use them to shop on the Web, in any store that takes branded credit cards, or to get cash at an ATM.

Generally speaking, kidcard accounts can't be overdrawn -- or at least, not by much. The card will be refused if the account runs out of cash. So your child can't go on the sort of spending spree that credit cards allow.

The first card, for kids as young as 13, was the Visa-branded PocketCard, which debuted a year ago. Parents apply for the card, which is linked to their bank account. You give your child spending money by shifting funds from your account into the PocketCard account.

If your child has personal money, from gifts or modest earnings, you can deposit it in your own account and move it from there into PocketCard. PocketCard sends you the monthly statements, so you can see what your kid has bought. You can even be notified by Web, each time the card is used.

The brand new Cobaltcard also offers parent-monitored accounts, for kids 13 and up. But this Visa-branded card can't be used to get cash from an ATM. It's strictly a shopping card.

Kids 16 to 18 can get Cobaltcards without a parent's approval, if they have their own checking accounts. (Cobaltcard does notify the parents.)

But kids with personal checking accounts don't need PocketCard or Cobaltcard. They can get a free debit card directly from their bank.

Visa itself has come up with a kidcard called Visa Buxx, which can be issued by banks. The parent applies for Visa Buxx, and loads it with a certain amount of spending power. When the money runs low, the parent can load it up again.

U.S. Bank in Minneapolis issued the first Visa Buxx cards starting last week, with other banks to follow.. Initially, there are no fees except ATM fees, although that could change.

There are two important things kids and parents need to understand:

* Although kidcards supposedly cannot be overdrawn, extra charges may slip through: PocketCard and Cobaltcard ask the parent to cover the overdraft; if you don't, the money will be taken from your account. U.S. Bank will charge a $10 overdraft fee; PocketCard charges nothing; Cobaltcard will charge persistent violators $15.

* The card could be stolen or lost, and used by someone else. PocketCard and Visa Buxx both say you'll owe nothing for the loss. At Cobaltcard, you're liable for $50 in unauthorized charges if you report the loss within the first two days. Otherwise, you could lose up to $500.

If you decide on a kidcard, explain it carefully to your child. If the child cannot manage the card, you'll know you have work to do.