Is There a Debit Card for Kids?

Not long ago, piggy banks and shoe boxes full of coins and small bills were the financial instruments of choice for kids looking to save their money. Now, children have even more choices to help them save more and spend their money responsibly. 

Teaching your children financial literacy and responsibility is now more important than ever. The average millennial carries nearly $28,000 in non-mortgage debt, and 72 percent of this age group owes some type of debt. Meanwhile, their Gen Z counterparts aren’t faring much better. Gen Zers are taking on credit card debt faster than any other generation, with an average balance of $2,781. They’re also falling behind on monthly payments.

How can parents teach their children the importance of financial responsibility? One way to teach young people how to manage their money involves opening a bank account that’s paired with a debit card for your kids.

This method is becoming increasingly popular. One online bank saw the number of children under 18 who used its debit card increase from 250,000 to 1.15 million in just two years. And with national savings rates hitting their lowest point in years, choosing to teach your children about financial literacy early and often may be their ticket to a more prosperous and better financial future.

Debit Cards for Kids: What Parents Need to Know

What does your family need to know about obtaining debit cards for kids and the benefits they can offer? 

Many brick-and-mortar and online banks now offer debit cards and FDIC-insured savings or checking accounts tailored to young customers. Each bank has its own services, age limits, fees, minimum deposit requirements, security measurements, financial literacy tools, and support tools that are tailored for children.

Different debit card accounts for kids will offer specific services, such as:

• A dedicated banking app that will help kids and parents oversee how much they’re saving and exactly what they’re spending. This can also make it easier for parents to set spending limits. 
• Goal-based or check-list-based “allowance” distribution based on tasks completed. 
• “Savings matches” that encourage your kids to save more and watch their money grow. 
  
  

Debit Cards for Kids: Tips for Parents

Here are some tips for parents who want to get a debit card for their kids:

Start with the Basics of Financial Responsibility

Financial literacy expert and children’s author Sam X. Renick found that the earlier you start a child’s financial education process, the better. Lessons should begin before age seven, he says, because research shows that money habits and attitudes are already formed by this age,

Parents should help their children understand how adults earn, save, and spend money. When opening a bank account for your child, remember to explain how debit card transactions work. Make sure to discuss the money value behind each debit card transaction.

Encourage a Savings-First Mindset

It’s imperative to show kids how to maintain a healthy balance between savings and spending using goals and planning. A popular method includes designating a budget for “savings,” “spending,” and “giving”. Explain to kids how to set aside certain amounts of money per month for each category.

Model Healthy Communication About Money

Kids are excellent observers. Their attitude and outlook are shaped by watching their parents and loved ones. Households that never healthily discuss money can inadvertently teach children that money is somehow shameful or something that should only be talked about in secrecy. 

Encourage your kids to discuss how much money they’re earning, saving, and spending regularly. This will help them make smart spending decisions and instill an open and healthy attitude about money. 

Start Investing in Your Kids’ Financial Future

Teaching healthy financial habits to young kids will help them make better and more responsible decisions later in life. Opening a checking account for your child will give them a headstart on a successful financial future. Because not all checking accounts offer the same benefits and features, a specialized checking account may be the best option for kids, as it will give them access to special features to help them learn important lessons.

Ready to learn more? Click here to download our Checking Account Guide.