Debit Cards for Kids
All the major card companies today offer debit cards for kids. These reloadable cards promise easy and quick money to teens, whenever they want it and wherever they want it. Pre-teens and teens themselves ask their parents to get them these reloadable debit cards as they are not comfortable with the idea of asking their parents for money every time they want to buy something or spend money on an evening out. When kids come of age, they expect parents to let them be and do not feel the need to explain each and every of their spending to them. The debit card companies recognized this need and came up with reloadable debit cards. Let us know more about these cards.
How they Work?
Prepaid debit cards, unlike the regular ones which adults use, do not require a bank account. Their working is very simple. A parent has to update these cards with money at regular intervals and the kids can use them whenever they want, but only up to the limit of the amount updated. Once that limit is reached, the parents have to reload these cards, before the kids can use them again. All major debit cards, including the visa cards, levy a small transaction fee every time a parent reloads them with money. Some card companies may charge a monthly fee for reloading these cards.
Pros and Cons
Debit cards for kids under 18 have many advantages, one of them being that the parents can actually keep an indirect check on the spending of their children. It is the parents who will reload the card again and hence, they will know exactly how much their kid is spending. Also, if needed, the parents can even keep an eye on how and on what things their kids are spending money, by looking at the transactions on line. So, the parents can control how much and on what things a kid can spend. They can guide their kid if they feel that he is spending on something unnecessarily.
From the kid's point of view, they do not have to ask their parents for money each time they go shopping or get their vehicle's gas filled. The kids do not have to carry cash and hence are safer with plastic money. With ATM's present in almost all locations, kids have an easy access to money wherever they go.
As far as the drawbacks are concerned, a significant one is that children get habituated to spending through cards at a very young age. If they are not advised by parents on the proper usage of debit cards, they might become habituated and hence face debt problems when they grow up and use credit cards. Another disadvantage is that the debit card companies levy a fees every time money is taken out of the ATM using these cards. Also, there will be an activation fee, account set up fee, transaction fee, etc. which will be charged for using this card.
As can be seen, there are more pros than cons of debit cards. The key lies in teaching the children to responsibly use their cards. The parents should make sure that their kids use the debit card occasionally and pay cash whenever possible. The children should be explained properly the importance of money and thus, should be advised against spending on things that they do not need. Fees levied on using the card at ATM, keeping the sales receipts with them post shopping to prevent misuse of card details by someone else and maintaining a record of transactions are some other things that children should be made aware of, when handing over the debit card.
