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