I have a 13 year old who is asking for a debit card. Is this a good idea? Is there a safe and maybe educational way to go about this?
Here are some things to consider.
- Why does your child want the card? Convenience? To avoid carrying very much cash? Peer pressure? Have a conversation about this, if you haven’t already.
- Are you considering a debit card connected to your checking account, or a prepaid debit card onto which you would load a specific amount of money? A prepaid card allows you to limit the amount of money the child can spend, but some have numerous, high fees. (See the report from Consumers Union.) A bank debit card will have fewer fees, but puts you at risk of the child spending as much as you have in the account – or more, if you’ve opted “in” for overdraft coverage. Overdraft charges can add up quickly. (See What You Need to Know: New Overdraft Rules for Debit and ATM Cards from the Federal Reserve Bank.)
- How much does your child already know about debit cards? Simply asking that question may give you insight into how knowledgeable and prepared she is to handle this responsibility.
- Can you depend on your child to 1) not share the PIN with anyone, and 2) to keep track of the card and let you know immediately if the card is lost or stolen? A lost prepaid card could mean losing any money on the card, unless you cancel it before someone uses it. A bank debit card limits your liability for fraud, but only if reported in a timely manner. Talk with her about the responsibilities that would come with this privilege.
- If you proceed, decide on ground rules for how, when, and for how much the card will be used. How will you monitor her spending on the card? If there are overdraft fees, who will pay those? What will be the penalties if she doesn’t follow the ground rules? Laying these guidelines out in advance will help both of you understand the expectations for using the card.
There are benefits and risks to either type of card, as well as a chance to learn some money management skills. You’ll have to weigh these and decide what is best for your child. If you decide against the card for now, you might agree to revisit the decision in another year or when she has learned or done certain things to indicate she can handle the resonsibility.