When Should You Give Your Child a Debit Card?

Debit Cards Are One Way To Teach Kids About Money

Mother and her daughter using a laptop for home shopping
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Debit cards make spending money effortless. As adults, we understand the implications of swiping that card and having money debited from our checking accounts. It's also a critical skill for children to learn, and it's never too early to begin teaching children the fundamentals of money management. One way of doing so is through hands-on experience with using a debit card.

The decision to give your child a debit card is both practical and educational. For many, it makes sense for young people to have a checking account and debit card around the time they enter high school, earn their driver's license, and get a job.

But how old do you have to be to get a debit card? Here's what you need to know. 

Key Takeaways

  • A debit card can help children develop good money habits.
  • It should be part of an overall plan to help children understand financial management.
  • Prepaid cards prevent overdraft fees but have several other fees to contend with.
  • The right age for a debit card depends on your comfort level and your child's maturity level.

A Quick History of Debit Cards

The term "balancing a checkbook" has its origin in the old way of managing personal finances; check users would need to maintain an idea of how their expenditures stacked up against their remaining balance each month to avoid writing checks that "bounced" upon being cashed by a third party. Every month, banks would issue a statement indicating what had been spent and deposited over the preceding month and what funds were available on the date of the statement.

Although debit cards debuted in 1978, the version that exists today wasn't offered or popularized until the early 1980s and didn't become widely used among young people for many more years. In 2018, for the first time, the number of debit transfers (16.6 billion) exceeded the number of check payments (14.5 billion).

Why Give Kids a Debit Card?

Giving your child a debit card can help them develop good financial habits. 

"Within the overall scheme of teaching a child to budget properly, a debit card can be a great tool," says Rob DeLucas, owner and advisor at Afton Advisors, LLC.

For example, a debit card can be a helpful way for kids to explore the basics of:

  • Tracking expenses with banking apps, online tools, and text alerts
  • Creating a plan for monthly spending using allowance and earnings
  • Understanding wants vs. needs 
  • Making safe debit card payments using a mobile phone 

A debit card offers a tangible way to make the connection between the value of money, spending, and the goods or services received. While the same objective can be accomplished with cash, debit cards and digital payments are more common payment methods.

Debit cards also allow children to spend money on school trips domestically or internationally or while visiting relatives.

"At younger ages, it’s important to use actual cash to help children become comfortable with money," says Tom Henske, partner at Lenox Advisors. "As they get older, moving to a more digital world better prepares them for the real world, a Venmo world."

Debit cards also provide an opportunity to tell your children about online debit card safety and risky places to swipe a debit card. Teach them to guard bank information, card numbers, and PINs, and to never post photos of a debit card on social media. 

Learning Modern Money Management

Encourage your child to practice any and all means to manage their money so that in adulthood, they can be prepared to earn, save, and build financial literacy. A debit card is just one aspect of modern financial management. Other ways to learn include:

  • Walking your children through your budgeting process
  • Teaching them what a savings account is and how to use one
  • Helping them set age-appropriate financial goals
  • Helping them develop an age-appropriate budget
  • Teaching them how to track their spending and compare it to their budget

Debit Cards for Kids: What Are the Options?

Generally, parents have two ways to give kids access to a debit card: either helping them to open a checking account or getting them a prepaid debit card

Depending on state statutes and an institution’s rules, some banks, credit unions, and financial institutions offer savings and checking accounts for children and teens. The accounts may be jointly owned by the child and parent or legal guardian, owned only by the child, or require the parent to act as a custodian.

Kids 12 and under are often limited to savings accounts with an ATM card. For teens between 13 and 17, teen checking accounts frequently offer debit cards allowing the holder to make purchases. Kids or teens can use their debit card to make a purchase at a store, and the money is deducted from their checking account balance.

For the most part, prepaid debit cards work like traditional debit cards. Teens or kids can use cards to pay for things. But prepaid cards aren’t linked to a bank account. Instead, money is added to the card, which can then be spent. Once the card balance reaches zero, no new transactions can be completed without adding more money to the card. 

Unlimited transactions doesn't mean unlimited checking account withdrawals. Make sure kids are aware of daily ATM withdrawal limits before attempting to withdraw cash.

Pros and Cons of Giving a Child a Debit Card

Pros
  • Learning the basics of money management

  • Learning the difference between wants and needs

  • Opportunities to learn from mistakes

Cons
  • Mistakes can be expensive

  • Requires monitoring

Giving a kid a debit card has advantages and disadvantages. With a debit card, a child can learn the fundamentals of managing money, better differentiate between wants and needs, and establish a mindful attitude toward future adult spending. 

A debit card can also help kids learn from mistakes if they have some freedom to make spending decisions. For example, your teen may want to spend all of their summer job earnings on a new video game system against your better advice. They may end up regretting the purchase later, but that can be a valuable lesson if they learn from it and don't repeat it down the line, Henske says.

On the other hand, a checking-account-linked debit card can be problematic if parents aren't offering helpful card management guidance, DeLucas says. For example, if you're not helping kids monitor spending, they could easily overdraft their account and rack up hefty fees.

Some teen checking accounts offer daily withdrawal and spending limits or can prevent overdrafts through declining charges. Ask if this feature is available when opening an account for your teen. 

Prepaid cards can avoid overdrafts since kids can only spend the money that's on the card. But it’s still important to help kids limit spending and monitor their card balance. Otherwise, you may find yourself frequently loading cash onto the card to keep up with their purchasing habits.  

Also, FDIC insurance doesn’t cover prepaid card theft or loss, and it may be difficult for children and teens to keep their card in a safe place. Consumer protections for debit cards are rarely extended to prepaid cards.

Deciding Between Debit vs. Prepaid

Debit accounts almost always come with an overdraft fee. Overdraft fees average around $30, but they vary by bank. For this reason, some parents feel that giving their child a prepaid banking card (rather than a debit card) can help.

Unlike most checking accounts, prepaid cards carry a variety of fees. This could present a more complicated (and potentially expensive) learning curve for young users.

If you're considering a prepaid card, make sure to review the card's fees. Some debit cards charge a fee each time you add money to the card, check your balance, or a monthly fee to keep the account open. 

A traditional checking account will teach your child the entire account management process, rather than simply filling a prepaid bucket. Checking accounts offer a debit card, (optional) checks, ATM access, deposits, withdrawals, and an introduction to working with bankers. Under your supervision at the bank and online, your youngster can learn everything they need to know about managing simple accounts on a daily basis. A prepaid card does not offer these benefits.

Something to keep in mind when setting up a debit card for your child is to ensure that the bank is not allowed to authorize transactions that your child does not have the funds for. You will have to sign off on this when you open the account, so read everything carefully, and make sure you're not signing up for overdraft services. If you don't understand what you're signing, ask the banker to explain it to you in detail.

Ultimately, when deciding whether or not to give your child a debit card, you need to remind yourself that the goal is to teach your child the basics of modern banking. Supervised use of a debit card gives young people a chance to practice simple electronic banking before they venture out into a digitized, globalized economy.

What Age to Give Kids a Debit Card

Giving kids a debit card is ultimately a personal decision. Much may come down to your judgment and the child’s maturity level.

"If I were to pick an average age, I find that around 12 years old is a good time to begin practicing with a debit card, with access to small amounts of money," Henske says. Doing so prepares children for future increases in money sums in high school, college, and adulthood. 

At this age, a prepaid debit card may be more appropriate if a child isn't yet old enough for a teen checking account. You may decide to upgrade them to teen checking once they reach an age where they're able to earn money of their own via a part-time job or side hustle, such as babysitting. 

Here are Henske’s final debit card tips for parents:

  • Thoroughly explain the debit card to your child, including how it works and what it's meant to be used for.
  • Develop a written contract (similar to cell phone usage) spelling out the card’s ground rules.
  • Don’t provide access to more money than you or they are comfortable with, either with a teen checking account or a prepaid debit card. 
  • Monitor spending so you understand what’s going on and can seek out teachable moments.