Carrying cash is becoming less common these days, which can be a nuisance for parents and their children”especially when it comes to paying children their allowance each week.
For many parents, cash allowances are becoming a thing of the past as they instead turn to prepaid debit cards that can be managed directly from their phones. In fact, by simply downloading an app onto their phone for the financial company they’re working with, parents can load money onto a debit card that their child can use at stores, gas stations and anywhere else where debit and credit cards are accepted.
Parents typically sign up for the account and then link their checking account or debit card to fund the child’s debit card.
Along with transferring an allowance, the app can be used to set spending limits, view expenses and automatically match money the child puts into a savings account. Taking this one step further, parents can receive a text message or email when their child makes a purchase”and they can even use the app to disable the card if the child loses it.
Parents can allow children to use their debit card anywhere or can limit it to certain stores and websites. Once these settings are in place, the card will be declined if the child tries to buy something at a non-approved store, or if they try to spend more money than is available on the card.
If the child has their own cellphone, they can get their own version of the app and check balances or get a parent’s permission to buy a certain item. Better yet, some cards can be used at ATMs.
Some financial services allow parents to set chores for the child to complete and then pay the child through the app when the chore has been finished.
If you’re looking to take advantage of this growing trend, some of the financial services that currently offer debit cards for children include Greenlight, Current, goHenry, FamZoo and Akimbo. TD Bank, American Express and Capital One also have debit cards for teens; however, some of these financial institutions require that teens have a checking account with the bank.
The debit cards usually have monthly fees of $5 or so, and some have annual fees. They usually don’t charge extra for adding money onto the card, though parents should carefully read the fee schedule before enrolling in a program because some charge fees for reloading, as well as other services.
Before giving your child a debit card, make sure they understand how it works and how they can check the balance. Use it as a chance to discuss budgeting and saving, and to get them started on a solid financial foot that will hopefully follow them into adulthood.
This article is intended for informational purposes only and should not be construed as professional or legal advice.
Published with permission from RISMedia.