A kids debit card makes it simple to deliver funds to children and give them spending power that they can use in person or online. Debit cards for children work exactly like regular debit cards, with added control features for parents or guardians.
While debit cards are convenient and easy to manage, you’ll need to consider the risks of sharing your child’s personal information online, including the dangers of identity theft. Banking apps for kids could sell your child’s personal data to other companies. You’ll also need to set expectations with your child about when and where they can use the debit card.
See my top picks for debit cards for kids and teens below. I also explain the pros and cons of debit cards for kids, and the security risks involved to help you determine if kids debit cards are right for your family.
After assessing the field, I settled on GoHenry for my 6-year-old son. Known for its personalized cards and customizable tasks like specific chores and savings goals, it’s a good choice for parents who want to help younger kids take on more household responsibilities and pay them for a job well done. What I really like: the company’s policy clearly states that they don’t sell your — or your kids’ — personal information to third parties without your permission. So far, my kiddo is halfway to earning the latest Lego Super Mario set and he’s never been happier to fold laundry.
At the time of publication, no conflicting description exists on BusyKid’s website.
One of the most popular debit card apps for kids, Greenlight allows parents to designate allowance to specific stores, pay interest on growing balances to illustrate compound interest and set specific earning goals. According to a colleague who uses it, the app is intuitive and easy to navigate.
But the company has had some bumps in the road when it comes to privacy. In a previous version of its privacy disclosure, Greenlight reserved the right to share your personal information with multiple parties, including “ad and marketing vendors,” “insurance companies,” “collection agencies,” and the vague category, “other service providers.” In a statement to Vice, a Greenlight spokesperson said the company would remove the language, and it has since done so. Note that COPPA requires that a bank secure your permission to sign a child up for a banking app, but doesn’t prohibit the company from selling your private information.
Designed for teenagers, this free app teaches young adults to use a checking account and debit card. Your child can use the account to send money to friends and vendors and pay bills. It also offers 0.1% APY interest. Axos does share your personal information with other financial companies to market products and services to you — but you can opt out of targeted affiliate ads.
Although there is no minimum age to sign up, Step is best suited for older kids who are ready to level up their financial knowledge. Like a regular debit card, Step draws on deposited funds to pay for purchases. Unlike a debit card, the Step card processes all transactions as credit — which means your teen can build credit safely without having to worry about overdraft fees or accruing interest.
You can opt out of sharing your child’s data by contacting the company directly.
Financial literacy begins surprisingly early. Most children recognize the value of money by age 7, according to a University of Cambridge study, including how it is earned and exchanged for goods. The study also found that although kids grasp basic money concepts at a young age, they’re still processing the difference between luxuries and necessities. (Many adults struggle with this, too: a budgeting app can help.)
Opening a prepaid debit card in your child’s name gives them an opportunity for hands-on experience under your guidance. Younger kids will do well with a prepaid debit card; older kids may be ready for an entry-level checking account with debit capabilities. Either way, as the custodian, you’ll need to open an account on their behalf and link it to your bank account. Afterward, you can transfer money to their card. Most cards and accounts feature modern tools to help you instill positive money habits, including:
New technology always presents risks — especially when kids are involved. According to a Pew Research survey, two-thirds of parents believe that raising kids is more challenging than 20 years ago, precisely because of technology.
And it’s not just screen time that raises concerns. According to a 2018 study by Javelin Strategy & Research, more than one million children were victims of identity theft in 2017, at an estimated cost of $2.67 billion. More than 80% of them were 12 years or younger. More recently, the Identity Theft Resource Center has received numerous reports of personal information breaches stemming from COVID-19-related stimulus claims. In one case, a 2-year-old’s identity was stolen and used to claim benefits.
Though that was not the fault of the financial industry, the banks do play a role in the problem. Data mining has become a valuable resource for businesses, and financial corporations have shown that they are more than willing to sell customer data. As such, the burden ultimately falls to those very customers to monitor and protect their own — and their kids’ — data.
Weighing the benefits and risks of a debit card for your child is a balancing act. The main thing to consider is how much you’re comfortable sharing online. While every issuer is different, you’ll need to provide identifying information about yourself and your child to sign up, including birthdates, Social Security numbers, address and phone number. The company may also ask you to share your GPS location history, purchase history and behavioral profile — information that may allow the app to share targeted ads for products and services. That said, debit cards for kids are no more risky than their adult counterparts for a few reasons:
Although the same security measures protect kid and adult debit cards, it bears repeating that any information you share about your child online increases their risk profile. Online data breaches have exposed massive numbers of accounts, which often contain sensitive information, including social security numbers, addresses, phone numbers and credit card numbers.
After signing your child up for a debit card, look for bills or credit card applications addressed to them and ask questions if a debt collector calls with their name on file. The Federal Trade Commission outlines steps to take if you suspect identity theft and Experian offers a free ID Scan service to see whether your child’s SSN is active on any credit accounts.
Before handing it over to a young and eager spender, a detailed conversation about debit card use is crucial. When the debit card arrives, sit down with your child and discuss the critical points.
It’s worth reiterating that minors are prime targets for identity theft, mainly because parents don’t detect a problem until their child begins working and filing tax returns. Although most debit cards for kids collect only the custodial account holder’s SSN, it’s still prudent to look for signs of child identity theft, including debt collection calls, bills or credit card applications that appear in your child’s name. The FTC outlines steps to take if you suspect identity theft, and Experian offers a free ID Scan service to see whether your child’s SSN is active on any credit accounts.
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