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Kids aren't born knowing the finer nuances of money. They may not understand taxes, loan rates, or that debit and credit cards aren't sources of magical, limitless purchasing power. However, you might want to clue them in early: Research shows kids can absorb financial concepts as early as age 3, and many of their enduring money management skills are set by age 7.
Many parents find giving their children access to a debit card is a great way to help them learn about money and finances early on. In a world where less paper money is passing hands, kids need to make the fundamental connection between swiping a bank card and the hard-earned cash behind that transaction. As a parent, you can help them learn and grow with a debit card—incorporating safety measures that will give you peace of mind while also giving your child some financial independence. Here's what to consider if you're thinking about getting your child their first debit card.
What Are the Benefits of Getting a Debit Card for a Child?
Many of the best ways for your kids to learn about money involve hands-on experience—under your guiding hand, of course. Debit cards for children, including prepaid debit cards, can instill vital financial knowledge and practices. With features to encourage earning, investing and saving, kids can use their cards to practice responsible money management and develop enduring financial habits to carry them into a stable relationship with money in adulthood.
Aside from the invaluable learning opportunity, debit cards for children can offer added safety benefits. For example, EMV chip technology embedded into most debit cards can help protect kids from fraud, and parents' ability to monitor their children's spending online can alert them if unsafe—or simply unapproved—transactions take place. For these reasons and more, debit cards can offer a much safer option than having your child carry around cash in their pocket.
To get a debit card for your child, you can go through your current bank or seek kid-specific card companies (more on those later). Depending on the company, you may encounter age restrictions, but many institutions offer debit card options for children ages 13 or even younger, so check your bank's requirements. Just like with your own card, your child's new debit card will link to a checking account that can be used for deposits, purchases and transfers. For prepaid cards, you get control and monitoring capabilities over their account.
Is My Child Ready for a Debit Card?
The best way to avoid any major pitfalls is to wait until your kids are ready for a debit card. To determine whether the time is right, consider three major signs they're ready:
- They've shown responsibility with money. If they regularly misplace valuables or cash, they may not have the maturity to look after a physical card.
- They earn their own money. Maybe this first bank account is to handle income from their burgeoning entrepreneurship—or maybe it's just a good place for your child's weekly allowance and savings.
- You've had money conversations with them. It doesn't need to be the main topic at the dinner table every night; however, introducing finances into the conversation regularly and early can help your children absorb good money habits and attitudes. A large part of knowing whether they're ready will come from knowing what you've already taught them.
If you think your child may not be quite ready for a debit card attached to a bank account, you may want to start with a prepaid debit card. These offer the fundamental safety and learning opportunities of a regular debit card, but with added training wheels for your child's first card.
How to Find the Best Debit Card for a Kid
Debit cards for kids come in nearly as many varieties as there are parenting methods. To find the best card for your family, first weigh common components of debit cards for kids:
- Security measures: Pick a card for your child that has EMV chip technology to improve safety. And, even if your kid's debit card comes from an online bank instead of your bank, make sure the account's funds are FDIC-insured.
- Parental controls: Many kid-specific cards include real-time parental controls, like store-specific spending restrictions and alerts.
- Fees: Check the fine print for reload fees (if it's a prepaid card), minimum account balances, added charges for contacting customer service lines and more. Whether you pay the fees yourself or have your child pay them, try to find a card and account with low fees. Your bank may offer a debit card and account with no fees as part of a family portfolio.
Apart from the basics, debit cards for kids may offer some additional tools. Look for these features if you believe they can be helpful for your child:
- Chore list: Some children's banking platforms connect a list of chores for you to check off and pay them for so they can see their work and earnings play out.
- Saving incentives: Some platforms offer extra motivation for kids to save up. For one, FamZoo allows families to pay interest on their kids' savings so they can watch their money grow.
- Investments: Yes, investing in stocks, but for children. Greenlight has an account option that allows your kids to allocate their funds to individual stocks.
- Personalization: If your child wants to bring their own style to their card, consider an option that lets them customize their debit card with a photo or design of their choice.
Keep in mind, some of these products and services utilize data collection that may be unsavory to you. For example, Greenlight and Step have faced criticism for foggy policies concerning children's data (parents must agree to terms upon signup). Read the fine print when you sign up; if you're not comfortable with the data collection policies of a company, skip it. Also make sure you review key threats to kids and their privacy online and how to keep them safe.
The Bottom Line
Debit cards give your child the chance to learn through action. And, since they learn within the boundaries you set as a family, you can limit the potential damage of mishandling money. Once your kids mature with their first bank cards, you can consider making them authorized users or procuring their first credit card to further their financial education. The earlier they learn to manage money responsibly, the better.