If you’ve got school-aged kids, chances are they’re bugging you for their own bank account and debit card. Their reasoning seems sound: it will teach them to manage their money, and allow them to get a snack from the tuckshop without cash. But many wary parents are asking if there are hidden pitfalls. We’ve done the research – here’s what you need to know.
Are kids even allowed bank accounts and debit cards?
Yes, although most banks have age limits, and if they are above that age, your child may be able to apply for an account by themselves online or at a branch.
How do debit cards for kids work?
In exactly the same way as your debit card works, with some added features. Some accounts have parental controls, so you can monitor your child’s spending and set weekly spend limits. Kids can use their cards to withdraw cash from ATMs and make in-store purchases.
Are there alternatives to banks?
Some companies offer pre-paid cards, which essentially work the same way as debit cards. Spriggy, ZAAP, FLX and Kit are some popular choices. Pre-paid cards aren’t attached to accounts, and parents and kids can monitor spending via an app. In most cases, these cards usually charge a monthly or yearly fee.
Kids debit cards – the pros
- It may be safer than carrying cash and you may be able to lock the card if it gets lost or stolen.
- You can transfer money to your child as needed, which could be helpful in emergencies.
- You may be able to monitor your child’s spending and access parental controls, depending on the card.
- It could help teach your child about managing money.
Kids debit cards – the cons
- There are minimum age limits, so your child may not be eligible for some accounts or debit cards.
- While usually banks waive the monthly account fee, other fees may apply.
- Depending on the parental controls of the app or account, you may not be able to control use of the card, such as adding spending limits or restricting certain merchants or sites. It’s a good idea to compare features of the provider’s app, as well as the type of account or service on offer, before signing up.
- Some banks will send your child a credit card application after their 18th birthday.
