What’s the best way to teach kids how to use plastic? What are the best credit cards for teens to have? I’m not talking about getting them hooked on credit cards, but rather how to use a debit/credit card, and how to manage spending. In essence, how to build their financial literacy.
It’s easy enough to just get a debit card, and link it to a checking or savings account, and call it done — but I don’t think this is the right solution.
- A checking/savings account could have a large balance – too much potential for overspending
- If it’s linked to a checking account, a debit card can lead to accidental overdrafts
- It’s never a good idea to spend a checking/savings account down to zero
A better idea, in my opinion, is to use a reloadable card, such as the USBank Visa Buxx card.
This gives the benefits of a debit card, but uses a separate account to hold the funds available. Here’s how it works:
- Kids 13 or older can get a Visa Buxx card, in their own name.
- The card is accepted everywhere Visa is accepted – transaction are run as “credit card” transactions
- The card also works at ATMs – allowing up to $200 withdrawals, and no fee at USBank ATMs.
- There’s no fee to reload the card if it’s loaded from a USBank account
- You can set up a recurring monthly reload – perfect for doling out allowance automatically!
- If the card is ever lost or stolen, the funds are protected. Just call the support line and have a new card issued.
- The child and the adult have (separate) online account access. The adult can set spending limits, or even turn spending authority on or off.
(I’m not endorsing USBank in particular, they just happen to be one of my banks. Many other banks also offer their own branded version of the Visa Buxx card.)
So if your daughter has a Visa Buxx card, she’s always got her “clothing” funds available to her, without having to carry around a hundred dollars of cash. Of course, she’ll still have to practice the same budgeting discipline, and the same monthly account reconciliation to monitor spending, but with online access and the monthly account statement, it will be easy to see where everything was spent.
I really like the Visa Buxx card- it takes the best features of a debit card and a reloadable card, making it the ideal choice for a kid’s first card.
Of course, if you are new to this blog, your child probably has a few baby steps to overcome first, like learning how to manage their own budget. You may want to start at the 401k Kid beginning.