Is Giving Your Kid a Debit Card a Dumb Money Move?

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These days, teens and tweens around the world have access to so much more than previous generations. Thanks to the internet, children of all ages are allowed to tap into so many different resources, but if you are a parent, you might be wondering if there is a boundary to be drawn.

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It’s never too early to teach the young minds of today about financial literacy to help them prepare for tomorrow. Luckily, lots of institutions now have programs designed to educate kids about how to use money in a variety of ways.

One question you might have as a parent or guardian is if you should give your kids a debit card. Double-check the laws that apply to the state you live in first, since different states have different rules about opening bank accounts for minors, then weigh your options. You are, after all, handing over a big responsibility to a young person who is inexperienced and might make a lot of mistakes as they learn to use their new debit card.

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GOBankingRates breaks down the pros and cons when it comes to making that big financial decision for you and your children.

Pro: The Power Is Theirs — and Yours

Giving your child a debit card can all depend on age and maturity, along with your comfort level and trust. Only you know your kids that well! But even so, the road to personal finance management can be bumpy for them.

One of the great things about a debit card is that it allows kids to build up good spending habits with a safety net, one which you have the power to control. Cards like ones issued by GoHenry allow for parents to set spending limits, as well as deciding where kids can use it.

Con: Plastic Isn’t Paper

The idea of money might seem very different to a child than it does to an adult. When you have tangible currency in the form of bills and coins, that feels very real. Receiving them means you have money, spending it means you don’t.

However, giving a child a debit card might make the concept of money seem limitless since spending takes place with the swipe, tap or uploading a PIN. There’s almost a feeling as if nothing has been exchanged for a good or service.

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“With cash [my daughter] knows that if she doesn’t have it, she can’t spend it,” said Tim Melia, a certified financial planner with Embolden Financial Planning LLC and a father who just went through this process with his daughter. 

“She may try to buy something and get declined for insufficient funds. This will challenge her to keep track of the balance. If she is faced with insufficient funds at a checkout somewhere it might be a bit of a wakeup call to be more organized.”

Make sure that if you are looking to get your child a debit card that you talk about fiscal responsibility in real-time, as well as setting up regular financial check-ins where you can look at their spending habits, balances and ways to save together.

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Pro: Lots of Perks

Just because your child has a debit card designed for their age doesn’t mean it can’t have a slew of goodies with it. For example, the Capital One MONEY Teen Checking debit card does just that, offering no fees and no minimums to your child.

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This debit card can be used at “70,000+ fee-free ATMs nationwide” and allows children 8 and older to open a checking account which they can earn interest on like an adult. Plus, there’s special annual perks such as the birthday gift.

Con: Risky Business

While many debit cards come with protections to help keep your children’s spending habits in line, you’ll want to make sure you read the fine print together as a family so you know what withdrawal limits and fees are associated with the account.

While Capital One MONEY and Chase First Banking have no annual fees, each has relatively low spending limits of around $500 a day. On the other hand, BusyKid Visa and FamZoo are two examples of debit cards that come with fees — BusyKid at $19.99 per year with a spending limit of $2,000 for a single transaction; FamZoo at $5.99 per month with a spending limit set by parents.

During the initial discussion with your family, make sure to review and take into account what your child’s debit card overdraft fees could potentially be in case they happen to spend more than they anticipated and end up with less money than expected.

Pro: Learning Through Experience

It’s one thing to read about how to make smart money choices in life, but it’s another thing to actually go out into the world and safely experiment with spending. 

Some cards, such as Greenlight, not only offer ways to save and keep track of your teens’ money but financial literacy and education tools as well.

Greenlight comes with fun quizzes, engaging videos and other educational resources, including ​​Greenlight Level Up, a financial literacy game your kids can play on their phone in the app.

Con: Parental Supervision Required

While it might feel like your child’s debit card is safe and secure, it’s not a foolproof babysitter for their money. Most debit cards require parents to keep a close eye on their children’s spending habits, as well as approve certain transactions, set spending limits, and most of the time, add funds.

“The inherent risks associated with debit cards would only be amplified in the hands of a child – namely, the risk of them losing or dropping the card,” said Dan DeLiberty, The Credit Lawyer and owner of 

DeLiberty advises that an alternative option is to have the debit card linked to your child’s phone, “depending on their age and level of technological sophistication.”

Not staying up to date with your child’s spending habits can be an expensive lesson, which might require you to step in to cover some costs or get them out of a financial bind. 

It’s important when deciding whether to get your child a debit card to not only go over the terms and agreements set forth by the debit card issuer but between you and your child as well.

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