When it comes to giving your child a debit card, you probably have questions. “How old should my child be?” “How do I teach my child to be responsible about money?” “Is giving my child a debit card truly a good decision?”

These are great questions to ask, as giving your child a debit card at the right time can be a very practical way to teach money management.

Here’s why.

Debit Cards Are Part of Everyday Life

How often do your children watch you pay for purchases by swiping a card, clicking a mouse or tapping your phone? Probably fairly frequently.

Here’s a brief history of how debit cards rose to popularity:

Debit cards were introduced in the early 1980s and were called “ATM cards” because their sole function was to enable bank customers to withdraw cash from their bank accounts using ATMs. By the mid-1980s, many merchants had begun to use computerized point-of-sale systems, which enabled customers to swipe their ATM cards at cash registers, enter a PIN and pay for their purchases. It took many more years for debit cards to become popular, but by the mid-1990s the use of debit cards began growing at an exponential rate. In 2003, the number of electronic payment transactions (debit cards and credit cards together) surpassed the number of paper check transactions in the United States for the first time.

Today, debit cards have become the most commonly used payment method in the U.S. for in-person purchases, and are a must for many online or mail purchases. Giving your child relevant experience with a debit card early on can help prepare them for the real world by understanding:

  1. How and when to use the payment tool properly
  2. How to use online and mobile banking to monitor accounts and transactions
  3. How to earn, save and spend responsibly

But when’s the right time?

The Right Age to Give Your Child a Debit Card

It often makes sense for young people to have a checking account and debit card around the time they enter high school, get their driver’s license and get a job. These major milestones correspond to taking on greater responsibility and also having both income and expenses to manage. That being said, there isn’t a universally right age, because even within the same family, children mature at different rates. Some may be ready for a debit card earlier than others. As a parent, you know your child best and will need to determine when they are mature enough to take such a big financial step.

At Bank of Utah, your child must be at least 16 years old to open a Student Checking account. It’s a great starter account, with no monthly fees and no minimum balance. As a parent or legal guardian, you must be a co-owner/signer on the account until your child is 18 or older.

When you decide your child is ready to open an account and get a debit card, it is imperative that you remain involved in their financial education. While debit cards are convenient financial tools, they also make it easier for your child to spend money. Set guidelines for what they can use the debit card for and teach them to monitor their transactions closely.

If your child does make a mistake with their student account, Bank of Utah doesn’t approve transactions for more than what is available. If a charge on your child’s debit card is declined, they’ll learn very quickly to be more aware of what they have in their account and to manage their funds better.

And while you’re guiding your child on the ins and outs of debit card usage, you can also teach them another skill: budgeting.

Six Steps for Teaching Your Child to Budget

1. Help your child determine what their income is.

They have to know how much money is coming into their account from their paychecks or allowance.

2. Help them calculate required expenses, like cell phone bills, gas or car insurance.

Make sure they also know what types of expenses are allowed on their debit cards.

3. Do a little math to find out how much money is left over.

4. Talk about the fun stuff.

Once you’ve covered the necessary expenditures, explain that what’s left can go into a savings account and that they can also use a portion of the extra funds for discretionary purchases, such as going to the movies, buying snacks or making other purchases.

Remind them that what they have in their account is all they have, and that might mean making trade-offs. For example, buying an expensive item now might mean postponing a bigger purchase.

5. Help them get what they want.

They may not be able to afford some big ticket items, such as a bike or a car, right away. Help your child set a savings goal and then plan how to achieve it.

6. Balance the budget.

Teach them that spending should not exceed income. If they overspend, you can help them look for ways to cut back spending or increase income.

Bank of Utah has budgeting tools within online banking that can help you and your child visualize and interact with their finances in an integrated, meaningful way.

Stay Involved

Getting a debit card is a major financial milestone, but learning how to manage one takes trial and error. Be ready to educate your child and guide them through the process.

And remember, when your child makes a mistake with a debit card while they’re young, the consequences are usually small. Once they go to college or start living on their own, the consequences can be great. Teaching children valuable financial skills early can get them started on a successful financial journey.

Good luck!

Stacey MacKayStacey MacKay is branch manager for Bank of Utah’s Heber branch. She is a mother of six grown children, each of whom has experienced a different financial journey. Stacey is also president of the Heber Valley Rotary Club, and she enjoys performing with the Midway Swiss Handbell Ringers.