Debit Cards for Teenagers

In the past, savings accounts were the most popular way young children, teens, and college students to manage their savings. To keep money on hand, they would often stash a small amount of their birthday money or allowance in a cigar box, piggy bank, or old lunch box before hiding it somewhere that they believed Little Sister would be unable to find. Then came the 80′s and 90′s, where it was popular for teens to have after school and summer time jobs. Instead of keeping cash on hand, their funds went into checking accounts. Without proper knowledge, however, checking accounts were also a tool that could land young people into debt as well as into a legal pitfall. Soon, debit cards would become the common way to manage money and would allow us to better teach young people proper money management.

Savings vs. Debit Card Accounts

Savings accounts were the most popular way for people to begin teaching their children how to manage their money, but savings accounts came with a draw backs. Most savings accounts had a monthly withdrawal limit, such as one hundred dollars or a stipulation that only two withdrawals a month could be made before the account holder incurred a penalty fee. Another downfall to savings accounts was that until recent years, they were only accessible during the bank’s business hours, which often didn’t include holidays and weekends when teens and young adults were most likely to want to access their funds. A debit account instead gave the account holders a chance to access their money any time, day or night, 365 days a year.

Checking vs. Debit Cards

Although many checking accounts have debit cards linked to them, there are some distinctions that must be made between the two. A regular checking account allows the account holder to issue a check, a piece of paper. A written promise that the number of dollars that they have written on the check itself are actually in the bank, ready and available at whatever time the creditor decides to present to the check to be cashed. If a person forgot to make a log of writing the check in their check register, it would then become much easier for them to accidentally bounce a check or checks. Whenever checks bounce, both the banking institution and the merchant are allowed to charge a nominal recovery fee, which typically averages $25 to $35 depending upon local and state laws. Businesses may attempt to process a check up to three times, incurring the fee each and every time that the check is returned. Even as adults, people are often forgetful and don’t keep a watchful eye on their spending and banking activity. Is it no wonder to see how young people could experience the same difficulty?

Debit cards allow the activity on within a checking account to be more controlled. Although many debit cards are linked to checking accounts, most consumers still write down each debit within a check register.

Teen Debit Cards

In a revolutionary effort to teach better spending habits, pre-paid debit cards soon became available. Like their predecessors, these plastic cards appear to be credit cards, but differ in the fact that spending is much more controlled. Parents can purchase these cards and load a specific dollar amount at the purchase terminal or through a variety of other means. The cards can then be used at merchants across the U.S. The debit card account is pre-paid and therefore cannot be overdrawn. Spending activity can be tracked on paper, through saving receipts, or many times through online statements.

We live in a society where time is money and the “swipe and go” method is the quickest, most convenient way to shop. By getting a debit card for our young people, we are teaching them how to be more independent and responsible consumers.