Many parents of teenagers struggle with money questions: allowance or no allowance, how to teach money skills, what sort of control should the parents exert over the spending, what if the kids travel without their parents and need some sort of financial emergency back-up plan?
To many of these question, debit cards sound like the right solution. You can get pre-paid debit cards, or debit cards linked to the child's bank account. They are offered by many different banks and credit unions, including Navy Federal Credit Union and USAA. Each financial institution and product has their own little terms and details, so be sure to ask a lot of questions before you pick the right one for your child and you.
Pre-Paid Cards
Our family first ventured into the world of teen debit cards four years ago when our then-13-year-old traveled from Italy to Oregon for a summer camp. I was terrified that she would run into some travel disruption and need access to money, but I didn't want her carrying a large amount of cash. After looking at the available options, we ordered a pre-paid Navy Federal Credit Union Visa Buxx card and loaded a few hundred dollars onto it. It worked out well. She used it for a few teensy purchases but otherwise it was just insurance. We did the same for our next daughter when she traveled to summer camp two years later. I was super-pleased with the product and it met our needs at that time.
Since then, the Buxx card terms have changed and there is a $1.00 per month fee for cards that aren't used in that month. Because of the nature of how we use the cards, that annoys me and I have very recently closed the accounts. We are moving to a a true debit card tied to their bank accounts.
- True Debit Cards
In contrast to pre-paid cards, regular debit cards are tied to a particular bank account. The process at the time of sale looks the same. True debit cards are less likely to have fees attached to the card itself, but the bank account may have transaction fees. USAA's Youth Checking offers fee free checking and debit card transactions to keep more of your money in your pocket. A friend's family has been using this for their children for several years and they are pleased with the way it works for them. I was considering Navy Federal Credit Union's Campus Checking for our kids, but they must be at least 14 and I have a 13-year-old. So, to USAA we will be switching.
Questions To Ask
When considering either a pre-paid or regular debit card, start shopping with a reputable bank or credit union. There are thousands of debit cards that will cost a fortune in various fees and charges - you don't want that. Once you've narrowed it down to two or three products, compare the details:
- Are there age restrictions?
- What sort of fees exist, and what would trigger them to be charged?
- Can it be used internationally?
- What is the relationship between the parent and the child on the account? What happens when the child turns 18?
- What happens if the user tries to make a purchase beyond their available money?
- What deposit and transfer features are available?
Debit cards can be a great tool for helping teens learn to manage their money and learn financial responsibility. Parents can help by selecting the right card to start, and supervising their teen's card use.
