Debit Cards - Credit Cards With Training Wheels - Genisys® Credit Union

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Debit Cards - Credit Cards With Training Wheels

on 3/8/2017

When it's time for teenagers to drive, they'll need to pay for gas, tolls and vehicle maintenance costs. Plus, whenever they are out on the road, there's a good chance they may be spending money at restaurants, stores, theaters and parks, too.

You probably don't want your teenager carrying a lot of cash, so that means he'll need a
credit card. What may have been a luxury for many parents when they were young is now a necessity for our teenagers, and it's crucial to establish spending boundaries long before they get in the car and drive away for the first time.


Fortunately, you have some good alternatives for controlling how much your child is able to spend. Handing your teenager a high-limit credit card with your name on it is not one of the best alternatives, so let's explore a couple others.


You can set up a separate share draft account (checking account) in your child's name, with a debit card issued in his name as well. This is the best way for a teenager to get in touch and stay in touch with the responsibility for monitoring an account balance and spending limits. If there's only $10 in the account, there's probably not enough to buy gas and get around. That means it's time to talk to mom and dad about making a deposit.


The communication factor is built into this alternative, which is a great way for them to learn about spending limits. This is true for teenagers and their parents as well.


Unfortunately, many parents make an assumption that their teenagers are fiscally responsible, so they are confident in ordering another debit card on their own checking account, in their child's name for his personal use. While it sounds like a good plan in theory, it doesn't generally work out in practice.


Let's face it - teenagers often behave very differently with their friends than with their parents. With a couple friends in the car, it can be tempting to use a debit card that's without limits a little too freely. But a debit card with limits could become embarrassing if a charge doesn't go through. Nobody likes to be embarrassed, especially teenagers.


So, setting a spending limit that's only on the debit card issued in your child's name can be another good option, if you choose to give him access to your account. You have complete control of the account, meaning you can disable your child's card or change its spending limit at any time.

Debit cards are like credit cards with training wheels. They offer safety and stability up front, when it's needed most. They don't open the door to credit card abuse, and yet they help your teenager start building good spending habits of his own.


Do you think your teenager is ready for his own account and personal debit card?  Let us help with teach them how to spend responsibly now so the spending training wheels can come off later.


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