Kids & Debit Cards

A great opportunity to teach money smarts.

Kids & Debit Cards

Image(s) licensed by Ingram Publishing


After spending an afternoon at the mall, your 13-year-old tells you her friends all have debit cards and she wants one too. You hesitate. You’re worried that a debit card will make it too easy for your daughter to spend
all the money in her account.

The reality is that we are becoming an increasingly cashless society. In fact, Canadians are the fourth largest Interac users in the world. Youth are a growing segment of that market. As parents, we need to adapt our financial conversations and lessons to accommodate how young people operate in our electronic world.

Eventually, your child will get a debit card whether you like it or not. After the age of 16, she doesn’t need your consent. Doesn’t it make sense to give her a card now so you can help instil good money habits that will last a lifetime?

How it works

A child who is old enough to earn money through a paper route or babysitting, is likely old enough to have a debit card.

When you go to the bank, set up two accounts. The first account can be a spending account, which the debit card can access. The second should be a savings account that is not linked to the debit card. Every time your child makes a deposit, he should put a percentage into his savings account. Decide on that percentage together. Alternatively, he can put allowance, babysitting or paper route earnings into his spending account and birthday gift money into his savings account.

Remember that if your child is under 16, you (or the legal guardian) are ultimately responsible for use of the bank account and the debit card. Check the bank’s service fees – many do not charge service fees for debit card use on youth bank accounts (unless the cards are used at another institution’s ABM).

Your main concern will be keeping track of your child’s money and ensuring it is spent wisely. So you will need to set a budget with your child and hold monthly reviews.

Have money chats

Sit down with her before you set up the bank accounts and figure out how much on average she’ll be putting in the spending account each month. Come up with a daily spending limit and make sure your financial institution implements it. Then come to an agreement about what percentage of money should go towards food, clothing, iTunes, games, etc.

Once a month, review the monthly statement for the spending account. Help him look at his spending critically. Did he stay on budget for each category? Is he aware where he overspent? “Oh, I see how your stops at Tim Hortons came to $……..? It adds up fast, doesn’t it?”

Talk about purchases that seem frivolous or too expensive in a matter of fact way. The idea is to increase awareness of how and what she spends money on, not make her defensive.

Safe use of card

Parents also need to ensure their kids understand their debit card responsibilities. Most financial institutions require a user to sign a document agreeing to safe debit card use. This includes not sharing their PIN (Personal Identification Number) and reporting the loss or theft of the card right away.

Young debit card users need to understand that they (or you, if your child is under 16) could be held responsible for any losses in their account if they do not follow these guidelines. Good safety habits when using a Point of Sale terminal or ATM include covering the key pad with a hand while inputting a PIN and being aware of people standing too close.

The lessons you provide about debit cards can help you raise kids who are empowered to make smart financial decisions.

Author: Christena Saunders

Christena Saunders is a mother of two who has worked in financial services for 12 years.

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