Why I love debit cards for my teens
By Laura Mohammad
March 7, 2014
There was a buzz last year within the 13-year-old set at my son’s middle school — one of his oldest friends had received a debit card from his parents.
We’ve known Trip’s family since the boys were 3, and have watched him and his 17-year-old sister grow alongside our two sons in north Austin. Trip’s parents are successful business owners and have long instructed their children in good money management. Trip, now a freshman in high school, has been saving for his first car since middle school, mowing neighbors’ lawns in the summer.
So, when my son Byron announced that Trip had been let loose with a debit card, I took notice, and I wanted to know more behind his parents’ thinking.
“We want to get him prepared for when he won’t be under our wing,” mom Tonya explains.
Trip and his sister were each given a card in January of their eighth-grade year. The cards are tied to their checking accounts. Trip is given $100 at the beginning of each month; his sister, Josie Kate, gets $150. They are expected to use their money for incidentals ranging from transportation with friends to clothing.
“It has been a good way to show Josie Kate the option of getting a book at the library rather than buying a book,” Tonya says.
So far, Tonya has not had to put limits on how the money is spent, although she regularly monitors their accounts, as do they.
Has anybody gone over budget? “Josie Kate has come close,” Tonya says. “She has been down to $5 or $10. I almost want her to run out. I want her to experience that while she’s still here with us.”
It intrigued me not to be nickel and dimed by my kids, so Tonya had my attention. But first, I wanted to know if there was a security risk. I immediately thought of the dangers of a kid’s stolen debit card wiping out his parents’ checking account, if overdraft protection is linked between the accounts. So, I checked in with my credit union.
It turns out the credit union allows you to opt out of overdraft protection. This means if the account has insufficient funds, a merchant will reject your card. I saw great possibilities with that. My kids could learn the embarrassment of overdrawing without damaging their credit.
Tonya, who banks with Wells Fargo, has a similar arrangement for her children’s accounts.
One issue to consider is potential fees. Business Insider warns of prepaid debit cards in part because of the fees. Also, Dave Ramsey recommends that you expose your teen to cold, hard cash first. But the fact remains that a card attached to your teen’s checking account is a tangible budgeting tool, and it’s something you can monitor online.
So, I checked with my credit union, and there were no fees attached to the cards. Add to that, the kids’ credit wouldn’t be impacted by mistakes. I was sold on Tonya’s idea. My husband and I decided on $150 per kid, with the option to veto the purchase of certain items (Byron has been bucking for a mini-fridge and television in his room since he was 9. I’d never see him again if I agreed to that!)
My 16-year-old, George, was concerned that he would not have enough when he needed to buy his next pair of shoes — he rips through them every few months. He was scared he didn’t have what it took to save money. But then, I watched his brain whirl as he figured out that he could save $50 a month for necessities and still have $100 for the fun stuff.
But George didn’t stop there. He decided he wanted to also save for a cheap travel computer. So now, the boy who hasn’t saved his money since he was 8 is forgoing McDonald’s and breakfast tacos for several months.
What about Byron? It’s more likely he will boycott the purchase of new shoes in favor of torn, worn ones, thereby making my husband crazy. But I plan to stand firm. If he really loves the idea of rainwater seeping into the holes of his shoes, he can go for it. But, as Tonya says, you want them to learn these lessons now, while they are with you.