Using a debit card is a great way to teach students valuable lessons on money management, lesson they will apply not only during their college life but in the years to come. The student can never get into trouble because of writing a bad check or overcharging. They will be forced to learn how to pace their spending until the parents top up the card at the agreed upon date. As parent, you might be concerned about how your kid is spending money — you will be getting monthly statements each month. The bank statement will guide you on how to help your student use money wisely. Say for example all transactions indicate were done at the beginning of each month, you might want to schedule some time/money management lessons.
Most debit cards allow parents to limit the withdrawals on ATMs to a certain amount a day to help control spending. Further, you can always check with the Credit Union you use about other measures in place to help handle fraudulent and misuse of debit card.
Youths between the ages of 13-19 are the highest consumers spending an average of $5,000 per year per child. This consumer group is at the highest risk of developing poor spending and credit habits which will not serve them well in the coming years. If you have a kid of college level, rest assured lenders will offer them very irresistible credit card offers; credit cards you may not be aware of at all. Sadly, most college student’s sign up for these seemingly attractive and irresistible credit card offers. The most unfortunate thing is that these students lack the experience and financial savvy to understand the ‘pit’ they are getting themselves into.
Today, it is highly recommended that you educate your kids about the use, and abuse thereof, of credit cards. A sure way of doing this is with debit cards, yes, debit cards. Parent-controlled use of a debit card might be all you and your kids need to build a firm foundation on financial literacy. A debit card looks exactly like a credit card, but all similarities end there. For a credit card, a student can charge the card up to the card limit the very day they get the card. But a debit card can be used the same way a credit card is used, but only with the amount on the card at that particular time.
What this means therefore is that if your child uses a certain amount every month, you can fund the amount monthly on the card and know they can never use next month’s allowance this month because the card doesn’t have the money. If you think about it, a debit card is more or less like a checking account. If the card doesn’t have any money, it gets rejected. Further, a debit card can be used in an ATM meaning access to cash is as convenient as using the local ATM. As such, a parent can set up with the bank that some given amount be deposited to the debit card on a regular basis, money which will reflect within minutes on the debit card balance.
