When Should You Give Your Child a Debit Card?

Mother and her daughter using a laptop for home shopping
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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, in order 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).

Today, the decision to give your child a debit card is a practical one, and 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. 

Modern Money Management

Generations that knew a world before debit cards may view these instruments skeptically, as a frivolous, digitized distraction from the sound financial habits of monthly budgeting and balancing a checking account.

Although checks are still being used today, according to the Federal Reserve, from 2015 to 2018, check payments declined 7.2% per year by number and 4.0% per year by value.

You should 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. This includes using a debit card and becoming familiar with the digital banking practices that accompany spending and receiving payment in the 21st century.

Young people will use checks less with each passing year, replacing checkbooks with online banking, and supplementing their debit and credit cards with direct, digital transactions from their mobile phone or personal computer. As such, the earlier they learn to use debit cards and digital banking, the better prepared they will be to manage a lifetime of electronic accounting as an adult.

Debit vs. Prepaid

Debit accounts almost always come with an overdraft fee. In 2018, the average overdraft fee was $33.36. For this reason, some parents feel that giving their child a prepaid banking card (rather than a debit card) can help set responsible limits on spending, while enabling kids to practice modern money-management habits, and having access to money in case of an emergency.

Banks require a joint signer for checking and savings accounts being opened by a minor, and this allows you to control their child's debit balance in virtually the same way you would for a prepaid card. Unlike most checking accounts, prepaid cards carry a variety of fees, and thus present a more complicated (and potentially expensive) learning curve for young users.

Common Prepaid Card Fees

  • Monthly Fee
  • Transaction Fee
  • In-Network / Out-Of-Network ATM Withdrawal Fee
  • Balance Inquiry Fee
  • Cash Reload Fee
  • Paper Statement Fee
  • Decline Fee
  • Inactivity Fee
  • Bill Payment Fee
  • Card Replacement Fee
  • Additional Card Fee
  • Foreign Transaction Fee
  • Card Cancellation Fee

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, make the banker 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 an advantageous chance to practice simple electronic banking, before they venture out into a digitized, globalized economy.