Debit cards for kids give them access to money, but are they a good idea?

Back in the day, getting pocket money meant getting your hands on cold, hard cash. There simply was no other option. You got a few notes or coins tucked into your hand, which you could either pop in your piggy bank or put in your pocket to pay for the week’s lolly stash. Today though, things are somewhat different.

As adults, we pay with debit cards and credit cards, digital payments and instant transfers, without so much as a sniff of proper, actual money. So, what does that mean for our kids? While dealing with cash still plays an important role in teaching children about money, there are other options on offer that can help them build the skills they’ll need in the cashless world of tomorrow.

Setting them up with their own debit card can be a great place to start. This not only helps them learn about managing their money online while allowing them to become more financially independent, it also lets them get a feel for using digital payments instead of cash. So, what do you need to know as you compare the options?

Everyday Account or Prepaid Debit Card?

As you compare debit cards for kids, you will likely come across two different types of account.

Everyday Account with Linked Debit Card

While this type of account is created specifically for minors, it works in much the same way as your own everyday account. After the account has been set up, your child will be provided with a debit card, which can be used to make purchases and withdraw cash at the ATM.

However, with kids, youth and teen accounts available, each type of account is tailored to offer age-specific features. For example, depending on the card provider, your child may need to be a minimum age to receive a debit card backed by Visa or Mastercard.

Most accounts will provide online and app account access, with varying levels of control provided to you as a parent (mostly dependent on the age of the accountholder). You should also find that most accounts for under 18s waive monthly fees.

Prepaid Visa or Mastercard

Just as you can get prepaid credit cards for adults, they are now an option for kids. There are a few options for parents looking to set up their kid with a prepaid Visa or Mastercard, with a couple of the best known being ZAAP and Spriggy.

With ZAAP, kids have a prepaid Mastercard or wearable (or both), which can be used online or instore, anywhere prepaid Mastercards are accepted. Access to the account comes with a smart app, which allows parents to monitor their child’s spending and instantly transfer funds.

Spriggy offers something similar, but with no wearable option, and using the Visa network instead of Mastercard.

In terms of fees, both options are likely to cost more than your average kids’ account with linked debit card. That means it’s up to you to weigh up the various features on offer, to then decide whether they outweigh the additional costs.

Another alternative is to give one off gift cards. These can not be topped up. They can be a good way of giving money as they are easier to replace than cash if they get lost in the post. They can also be a more personalised experience than getting a present as notes.

Pros and Cons of Kids’ Debit Cards

Is a debit card the right choice for your kid? That will really depend on your child, where they’re at developmentally, and where you want to take them. With that in mind, let’s take a look at some of the pros and cons so you can see what you both could get from the experience.

• It’s safer than carrying cash. You may be able to lock the card if it gets lost or stolen, whereas with cash, it’s gone.
• Your child can only spend what’s available. With the right controls on the account, there is no way for your child to get into debt.
• You can monitor what your child is spending. A good kids’ account will offer parental access to monitor spending. This option may not be available on teen accounts.
• Your child will have money when needed. Depending on the account, you may be able to load funds instantly for your child to use in an emergency.
• You can teach your child financial responsibility. Working together, you can show your child how to deal with money responsibly. Having a linked savings account could help with this.
• Your child can learn how digital payments work.
• Your child won’t need to borrow your card to buy stuff online. With their own card offering this functionality, your child will use their own money to cover their own purchases.
• Your child shouldn’t be able to buy things that aren’t age-appropriate. Some options (such as ZAAP) cannot be used to buy alcohol, to gamble, or to access adult sites.

• Age limits apply to some accounts.
• Fees on some options may be costly.
• Kids could spend on frivolous things
• Friends could spend the money and not on what you intended

Choosing a Kids’ Debit Card

What should you look for as you compare debit cards for kids? Again, this will usually depend on your child’s age, how much control you want, and what you want your child to gain from the experience.

• • Spending controls. Look for the ability to put spending controls on your child’s account, limiting how much your child can spend day to day. You may also be able to choose where the card can be used, limiting whether it can be used to make instore purchases, online purchases or ATM withdrawals.
• • Card locking. If your child loses the card, it’s handy to be able to lock it. Doing this means it can’t be used if it ends up in the wrong hands, and keeps your mind at ease even if it’s just lost behind the couch cushions.
• • Tracking and monitoring. You can use these tools to keep track of what your child is spending and where, while also teaching them about how to be more responsible with their money.
• • Fees. The cost of keeping a kids’ debit card will depend on the type of account you choose, and the card provider. Look at the features and what they could offer you, to then weigh that against the cost of the card.