Debit Cards for Kids: 6 Tips for Using These Financial Education Tools

According to a 2018 survey, almost 30% of children have used their parent’s credit or debit cards without permission. And around 50% of people responding to the same survey said they gave children permission to use their credit cards—with most of those individuals coming to regret the decision.

One reason handing your child your credit or debit card can be an issue is that they most likely do not fully understand the money management that goes into using the card. Debit cards for kids can be a great way to help children understand how to properly use these types of payment methods and build strong money management skills for the future.

What Is a Debit Card for Kids?

Because children cannot open their own credit card accounts until they are 18, some debit card products allow adults to add subaccounts for their children. These types of debit cards can have custom spending controls—for example, limiting spending to $10 a day or a certain amount each month. Some might even allow you to lock the card or limit where your child spends money. In many cases, your child will need to be at least 13 years old to qualify for their own card.

You could also opt for a prepaid debit card. These cards won’t have any parental controls beyond the amount of money you decide to put on the card. In this case, you place a certain amount of money on the card, and once that money is gone, your child can’t use the card until you refill it.

What to Do Before Getting a Debit Card for Kids

When you’re looking for a debit card for your child, consider the following factors:

• Some debit cards for kids might require a small fee for online portals that let you review your child’s spending or teaching tools that help educate children about money management.
• You probably want to opt for a card that’s backed by one of the major credit card networks, such as Amex, Mastercard, Visa, or Discover, to ensure your child can use the payment method as needed as either a debit or credit card.
• Parental Controls. An online account option that lets you see what money is flowing in and out of the card—and where your child is spending—can help you monitor activities for safety purposes and so you can guide your child in strong money management habits.
• You may want to start with a prepaid card for optimal control. You can also tie a card to your existing accounts, and it will draw on those accounts as your child spends. While you might even fund the debit card with your own credit card, remember that if you don’t pay off the balance every month, you’re going to be paying expensive interest costs on whatever your child deemed worthy of purchasing. And that might ultimately be bad for your own credit score.

Tips for Using Debit Cards to Teach Kids about Managing Money

If you decide to give your child a debit card, consider staying involved in the process as they learn about financial management. Here are a few tips for doing so.

1. Equate money you put on the card with chores or other activities.

Don’t just load the card with “free” money and send your child on their way. Equate it with chores or other ways your child can earn money. This helps increase their understanding of the value of money and the fact that it’s not unlimited, so you have to be careful how you use it. It also helps inspire good work ethic.

2. Encourage your child to save up for things they want.

If you’re giving your child an allowance or payment for chores, consider not giving in and buying them everything they might want. Obviously, you’re likely to continue to fund necessities and even splurge on items for your child from time to time. But if your child wants a new, slightly pricey toy or a popular pair of brand-name jeans—and you already bought jeans for this school year—consider discussing how these are something they can save up for. Then, help your child make a plan to save up for what they want.

3. Allow some autonomy in how your child spends—within reason.

Your child will likely make mistakes in spending their money, such as splurging on candy in the checkout line when they really wanted to save up for a new toy. While that can result in temporary disappointment and even tears, those are actually good mistakes to make because they teach your child important lessons about budgeting and saving that can serve them well as they grow into adulthood.

Depending on their age and the safety of doing so, consider giving gentle advice rather than forcing or fully instructing your child on what to do with their money.

4. Meet periodically to discuss your child’s spending, savings, and budget.

Set aside time each week or month to sit down with your child and talk about their spending. Show them online accounts and talk about how much they spent on certain things and if they’re happy with their purchases. What would they buy again, and what do they wish they hadn’t spent their money on? Ask if they’d like to set a goal to save up for something.

5. Integrate other financial management tools and topics.

Don’t limit children to the concepts of spending and saving, especially if they’re a bit older or have an advanced grasp on the topics and math. You can start talking about simple investment concepts—even if it’s only a savings account—as well as debt and credit. If you’re feeling up to it, order your free credit report and show them how each of your financial decisions impacts the decisions you can make going forward.

6. Help your older children transition into adulthood.

Your child can get their own credit card once they turn 18. Consider adding them as an authorized user on your card before then—with guidelines for how it can be used—to help them learn responsible credit card use and build their credit.

Keep Up with Your Own Finances

And while you’re helping your child learn to manage their money, don’t forget to manage your own financial life. Check your credit, review your accounts, and make sure you’re getting the best rates on all your credit cards. If you aren’t, check out the Credit.com credit card marketplace to see if you can find a better deal.

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