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As your teen grows his or her financial independence through part-time jobs, you will naturally begin to wonder when the right time will be to get your child a spending card of his or her own. Hopefully, you realize teenagers are too young for actual credit cards, so you are wondering about a debit card.
When is the Right Time to Get Your Teenager a Debit Card of Their Own?
Before working with a bank or credit union to get your teen a debit card, make sure your teen:
- Has reliable income
- Has a habit of regular savings deposits
- Does not lose his or her wallet frequently
- Stays in regular communication with you about their spending
Here is the actual checklist to complete before approaching a bank or credit union for a debit card:
✅ Your teen has a reliable source of income (e.g., part-time job, regular allowance, chores for neighbors)
✅ Your teen has regularly deposited a portion of his/her income into savings for the past six months or more
✅ Your teen has a checking account
✅ Your teen has carried his or her wallet around regularly without losing it for at least the past six months
✅ Your teen has a written spending plan in place and uses it regularly
✅ Your teen reports his or her spending to you at least weekly
✅ Your teen is ready for limited independence (driving, going to the mall/store/restaurant with friends, etc.)
Once you can check EVERY box on this list, you can head to your bank or credit union and request, with confidence, that they issue your teen a debit card. In most cases, teens are between 16 and 18 years old before they are ready to carry a debit card responsibly.
Otherwise, read on to learn how to help your child prepare to become a debit cardholder.
Risks of a Debit Card
Many parents fail to consider the consequences of getting their unprepared teen child a debit card of his or her own. In most instances, short-term risks are relatively minimal, given the likely low balance of the child’s account. Potential long-term problems are rarely given a thought.
In the short run, if your child is not ready for the responsibility of carrying a debit card, he or she may end up having to pay replacement card fees or, worse, may become a victim of fraud should someone find the lost debit card and use it fraudulently.
Other short-term challenges include the child’s undeveloped ability to say “no” to any friends’ requests. Friends can quickly empty your child’s account by asking your innocent and kind-hearted son or daughter to buy them lunch, “share the wealth,” or treat them to vending machine treats and snacks.
Long-term consequences of providing your unprepared teen with a debit card can include tendencies toward negative beliefs about money, unhealthy concepts of debt, and an aversion to managing his or her personal finances at all.
Reliable Source of Income
Without regular income from a part-time job, allowance, or neighborhood chores, your child will quickly tire of the debit card novelty behind the school ID card. Forgetting about it may not be an issue except that things forgotten often become things lost or things tossed away. If they are struggling to find a job locally, there are online jobs for teens available that can help them earn money from home.
A Habit of Savings
If your child begins using a debit card before developing the habit of saving a portion of everything he or she earns, you should expect the child to develop a natural love for spending and a distaste for saving. Saving will immediately become a nuisance that prevents him or her from spending.
If, on the other hand, you help him or her develop the savings habit first to appreciate its importance by tracking savings balances and charts, the habit is more likely to overcome the preference to “spending 100% of my money.”
Although there are many prepaid debit cards you can purchase at just about any retail store, these all come with fees and high penalties. They also almost universally lack the same immediate protection that comes with a debit card tied to an FDIC- or NCUA-insured checking account.
Having a checking account first means that any fraudulent charges on the debit card can be reversed if reported promptly, with a maximum loss of $50.
Most banks and credit unions are resistant to offering teenagers their own checking account and debit cards until they are 16 or even 18 years old. If this is your experience, build a relationship with the branch manager so that you can convince him or her that your child is showing every sign of responsibility expected of a new account holder at the branch.
Responsibly Carrying a Wallet
There are a few teens who will be so careful with their wallets and purses that they will keep each safe and still be using them well into their young adulthood. Other teens (I can confidently say most teens) do not fit this description. Wallets given to most teens are lucky to last six months before being lost, sent through the washer and dryer, or lent to a friend and never returned.
Monitor your child for six months while he or she learns to carry a school ID card without losing it.
Possessing a debit card without a spending plan is a recipe for spending every penny on the first eye-catching item that comes along. Help your teen to build a spending plan that works for his or her goals and priorities.
Whether your teen lists every expected expense or breaks his or her income down by percentage into some general spending and savings behaviors, having a plan in place will help build a healthy relationship with money, spending, and saving.
Requiring your teen to report every penny of his or her spending every week is not an invasion of privacy, as your teen will inevitably argue.
The goal is not to “spy” on your child through his or her bank account. It’s to help your teen develop critical thinking skills and to explain why he or she felt it was more important to spend $10 on specialty sodas in one afternoon than on the larger-ticket item he or she has been wanted for the past twelve months.
If your child is not driving yet or going to retail stores on their own yet, there may be no compelling reason to have a debit card. Debit cards can be tools to help teens responsibly build upon their growing independence gained with drivers licenses, metro passes, and hanging out with friends.
Giving a teen a debit card just because he or she wants and requests one does no favors to your child. Be sure you are assisting your teen along the road to young adulthood by helping them develop the responsibility and independence skills required for and built by a debit card.
Can a 12-year old have a debit card?
Banks and credit unions have their own policies regarding the minimum age required of an account holder to be issued a debit card. Some financial institutions start at 16, while others can be persuaded by parents who can demonstrate their 14-year old is responsible enough and ready for a debit card.
What is the difference between a debit card and a prepaid debit card?
A standard debit card is tied to deposited funds in a bank or credit union checking account. A prepaid debit card must be loaded or charged with funds at a store or online. Prepaid debit cards are often described as “stored-value” cards because their value is within the card, not within a financial institution.
What are you doing with your kids to teach them about money and personal finance? Have any tips for parents on what’s worked for you? Let us know in the comments below.
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Author and speaker Todd Christensen, AFC, MIM, MA, of Money Fit by DRS promotes individual financial responsibility and household financial stability in his writings and conference presentations. He is regularly interviewed by and featured on national sites such as NBCNews.com, Fox Business News, Forbes, HuffPost, and Mint.com.
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