A children’s credit card can be a useful introduction to the world of borrowing. This article explains how you can get one for a young person under the age of 18 to help them manage money responsibly before they go it alone as an adult. Additionally, you’ll find some pointers on some of the best prepaid debit cards around that are even suitable for under 13s.
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Getting your children to understand the concept of money can be a challenge, especially when you consider that we do seem to be moving towards a cashless society. Using a debit or credit card to pay for purchases is a way of life for most Americans today.
It’s a good idea to let your kids practice using a debit or credit card under your watchful eye so that they are fully prepared and able to use them responsibly when they’re old enough to earn and manage their own money.
One way you can do this is through a prepaid debit card that is suitable for teens and younger children. Some of the best ones around include:
- TD Go
Most of these mentioned above come with super-smart apps where kids can track their expenses, set up savings goals and earn money through an allowance or by doing chores. Parental controls are all part of the technology. gohenry even provides debit cards with personalized branding and card design.
As you can imagine, these prepaid cards/apps can be enjoyable and exciting to use! Each one encourages kids to budget, spend carefully and save for the things they want to buy.
“Financial education can’t just be taught through books. It must address modern money, embrace technology and provide a hands-on experience which helps build a strong financial routine” says Gregg Murset, Co-Founder & CEO at Busykid, an app that simplifies chores and allowances for both parents and kids. Gregg adds that his application allows kids to “work on building their own routine through earning, saving, spending, sharing and investing real money (via weekly allowance) the same as they’ll need to do as adults”
One point to note is that prepaid cards for kids do come with fees that can be quite costly over time, so you’ll need to weigh up whether you can justify the cost or not.
We’ve covered all of the kids’ prepaid debit cards referenced here in detail via other articles already published on this site. Do check them out to note the essential facts about each of them.
You might find that a kids’ bank account and debit card will be a more cost-effective solution. The Capital One Teen Checking Account, for example, is fee free and allows teens to manage their own money, track their expenses and practice budgeting skills
Checking accounts are generally best suited for children over the age of 13. If you have kids younger than this, you can open a children’s saving account for them instead.
The Bank of America Minor Savings Account has no fees, requires a small opening deposit of $25 and comes with a debit chip card too. The APY on this particular account is 0.03%. There are other child savings accounts with better interest rates, but not all come with a debit card.
It’s not possible for young people under the age of 18 to apply for their own credit card account. However, as a parent or guardian, you can add them as an authorized user on your own account. Your child will then get a credit card in their name, which they can use to make purchases, but you’ll retain overall responsibility for the account.
The benefits of doing this include:
- The chance to teach your kid how to use credit responsibly, including how they can avoid interest charges if they pay back what they’ve borrowed in full within a statement period.
- Helping your kid to become financially savvy, by showing them how to make the most of cashback offers, discounts, and other credit card rewards.
- Easy access to funds in the case of an emergency.
- The opportunity for your child to start building a credit history.
Many providers won’t charge a fee to add an authorized user to your credit card account. But some do – and they may also stipulate age restrictions – so be sure to read the small print in your credit card agreement.
Virtual money management is an excellent lesson for kids, but don’t do away with cash entirely just yet. There’s much to be said for saving loose change in a glass jar. Actually being able to see a coin stash grow is very motivating! Plus, the value of money is realized more acutely when kids see physical cash being handed to a cashier in exchange for goods.
As well as showing your kids how to manage their money, don’t forget to instill the importance of contentment, and sharing. Teach your kids to be content with what they’ve got, so they don’t fall prey to peer pressure and start pining for expensive items they don’t need. And get them into the habit of charitable giving, so they can learn from a young age to help those in need.
*We hope you find this article helpful. Please note that it shouldn’t be taken as professional financial advice.