How old is old enough for a debit card?

April is Financial Literacy Month (who knew?), so we got to thinking: What’s the best way to teach your child about money in 2022? Your parents may have given you a cash allowance, and your first part-time jobs may have paid you in paper checks — but your kids are likely to earn, spend and manage money entirely within a digital environment. This means that today’s parents need to switch their financial advice from paper to plastic — that is, from dollar bills and birthday checks to debit cards and online banking apps.

“Introducing kids to debit cards makes a lot of sense in our digital-first world,” says Riley Adams, CPA and Senior Financial Analyst at Google. Adams, who shares financial literacy advice at Young and the Invested, has written a post about the best debit cards for kids. “Parents should understand the features offered by each card on the market. Is a debit card custom built for a kid worth the monthly fee many bring? Or should you contact your bank and ask if they offer a free debit card that your kids can use?”

We reached out to three financial experts to learn how parents can prepare for this important financial transition — and how you can prepare your children to manage real money in a digital world.

When is your child ready for a debit card?

How old is old enough for a debit card for children? Many banks require children to be a certain age before they are allowed to open a debit card in their own name, and your children’s options may be limited until they are 13 or older — but some banks allow younger children to use debit cards that are connected to a parent’s checking or savings account. Check with your bank or credit union to see what their age requirements are, and what kind of debit card for children is available .

In addition to bank-issued debit cards, there are several new fintech (financial technology) debit cards designed to help children learn how to manage money. These cards, which are connected to a parent’s bank account, are often available to children as young as 8 or even 6 — which means that you could begin the process of teaching your children financial literacy at a very early age.

“Some kids show strong financial literacy and can handle a card as early as their middle childhood to preteen years,” Adams explains. “Others, not so much.” That’s why he likes debit cards that allow parents to set a spending limit and receive notifications whenever their child makes a purchase. “These kinds of debit cards work for both types of kids and give parents peace of mind, no matter where their kid rests from a financial readiness point-of-view.”

What kinds of debit cards are available for kids?

If you’re looking for the best debit card for children, you have two options to consider. You could help your child open a traditional debit card through a bank, or you could apply for a debit card specifically designed to teach children financial literacy.

“The marketplace is filled with debit cards targeted at parents who are trying to teach money management to their kids,” explains Amanda Monschein, Financial Advisor at Stratus Wealth Advisors. “These cards charge monthly fees, and several of the most popular and innovative products in this space include Greenlight Debit Card for Kids, FamZoo Prepaid Card, and GoHenry Debit Card.”

If you help your child open a debit card through a bank, the card will be linked to a checking or savings account in your child’s name. “Most banks offer debit cards that kids can tie to their own checking or savings accounts,” says Monschein. However, a kids debit card like Greenlight, FamZoo and GoHenry are connected to the parent’s bank account, not the child’s. “These accounts are typically linked to a parent’s bank account and are managed exclusively on an app.”

Why would a kids card be linked to a parent’s bank account? Because this gives the parent the ability to customize the debit card to meet their child’s needs — whether they want to deposit money every time a child completes a scheduled chore, or whether they want to set a spending limit that keeps their child from blowing their entire allowance on video games or candy.

“Money management debit cards allow parents to assign chores to their kids and only transfer the allowance once the chores are completed and approved via the app,” Monschein told us. “Some debit cards allow you to apply daily or weekly spending limits or block spending in specific merchandise categories. For example, a parent could set up their child’s card so that they were allowed unlimited spending at gas pumps, but only $20 per week at Starbucks.”

How can you choose the best debit card for your child?

Is it better to get your child a traditional debit card issued through a bank, or to sign up with a money management debit card like Greenlight, FamZoo or GoHenry? It depends on how much work you’re willing to take on — and how willing you are to pay a monthly fee.

Money management debit cards are most likely to be attractive to parents who want a lot of control over the process. “The primary features parents tend to like are the controls offered over where and how much their children can spend,” says Adams. “You can enable cards to send notifications and alerts when kids make purchases, keeping you in the loop as the dialed-in parent.”

However, these kinds of debit cards come at a cost — first in terms of the monthly fee associated with the card, and second in terms of your time. “These cards require parents to manage an app where they assign chores, accept transactions, place spending limits, review purchases, etc,” Monshein explains. “Many parents report that this system of management takes about 5-10 minutes per day, so over 30 minutes of time per week.”

Many bank debit cards, on the other hand, are free — and savvy parents can figure out their own ways of customizing their child’s card to encourage financial responsibility and spending. “I started each of my three children with an allowance at age 13 that is automatically deposited into their checking account monthly and has a debit card attached,” Chris Hardy, CFP® and CEO of Paramount Investment Advisors, Inc., told us. The monthly allowance is designed to be enough to cover all of his children’s discretionary needs for the year — birthday gifts for family and friends, clothes shopping, entertainment spending and so on — as long as it is managed wisely. “This method has allowed them to spend money on items they feel are important,” says Hardy, “along with making some mistakes and wishing they did not spend the money how they did.”

How can you help your child use their debit card wisely?

The most important thing a parent can do, when introducing your children to debit cards, is have a plan to help your child use debit wisely. This means being ready for your children to make mistakes — and being ready to help them get back on track.

One of the key lessons you can teach your children is that certain times of the year — holidays and vacations, for example — are more expensive than others. Hardy gives his children the same amount of money every month specifically so his kids will learn how to budget and plan ahead. “Some months there are few expenses and other months there are significant expenses that may be more than what they have coming in,” he explains.

You can also teach your children that they can increase their spending power not only by creating savings goals, but also by doing extra work. “Your child may earn money from a special project that you might allow them to use at the video game store,” suggests Monschein. Many of us spend our working lives balancing traditional jobs and side hustles, after all — and if you teach your children how to be smart earners as well as smart spenders, that’s a win-win.

Lastly, you can teach your children that the basic fundamentals of personal finance and financial responsibility stay the same no matter how old they are. A child who learns how to save money for a sibling’s birthday present may grow up to be a teenager who can save for a reliable used car — or an adult who can save for a down payment on a home. Once these lessons are learned, they last a lifetime — whether you’re paying with cash, credit card, a debit card, cryptocurrency or whatever the future may bring.