Debit Cards for Children – Pros and Cons
It is never too early to begin to teach children about the value of money. It can be very helpful to a child to develop an understanding and an appreciation of how money is earned and the expense of everyday items and that education is essential for a child to have before they are given access to a debit card. The responsibility of using a debit card and the many things that can go wrong if it is used incorrectly or recklessly are lost if someone, anyone, is using that card without that education.
If a parent or guardian is confident that the child has gained an understanding and appreciation for money and the responsibility of using a debit card, the next step is to establish the purpose of issuing that card to that child. The only purpose that really makes sense is to further that education through actual application and to do so while providing oversight and discussing what is being learned along the way. Parents should not fool themselves into thinking that issuing a debit card to a child is solely a matter of convenience or to somehow make their job easier. It is the perfect opportunity to create a learning experience and to talk about decision making as well as the costs of items and services and the justification of those costs. What did you spend monay on today? Why did you spend that money? What value did you receive or what did you gain from buying that item?
If a parent is willing to put in the time to educate a child about the use of a debit card, to define a purpose for that card, and then measure the usage and talk about the experiences gained along the way, the parent is ready for that card to be issued and the child is very likely ready to responsibly use that card.
It is also important to establish any applicable limits and to talk about best practices. Here are few things that I tried to teach my kids over the years:
Do not use your debit card for on-line purchases. Cyber crime is growing exponentially and much of it is proliferated through websites and on-line transactions. If fraud is committed and it affects your debit card, you will get your money back, but until that occurs your actual money is gone. Use one credit card for on-line purchase whenever possible.
Be careful when you use your card. When you enter your pin, ensure that no one can read the numbers you are typing in. Use the card at businesses you know.
Do not use your card for all purchases. When and where possible, use cash for your purchases, especially for small items.
Always be aware of the money that is in your account. Fees can rack up quickly when you are spending without regard to how much money you have on hand.
Review your transactions regularly just to make sure you made all of the purchases reflected on your account.
Parents also have to be willing to ask some of these questions of their kids and to regularly discuss what is going on with their kids’ finances.
If parents/guardians and their children are willing to take these steps, the positives of allowing a child to use the debit card will far outweigh the negatives.
For additional tips and assistance with all of your budgeting and financial planning needs, please contact the Credit Union’s Financial Planning and Education Center, which offers FREE AND CONFIDENTIAL Credit Counseling for members and your immediate families. Our Credit Counseling services are led by our Trusted Business Partner, Certified Credit Union Financial Counselor Gwendolyn Hawkins, who has been assisting our families Law Enforcement with their Credit needs for over 25 years.
Chief Executive Officer
Chicago Patrolmen’s Federal Credit Union