Think about all the holiday gifts your kids get excited about. Now think about how many of them actually get used a few months later. A debit card could be different.
It’s a gift that’s not just about letting your child spend money. It’s about teaching them how to manage it. With their own debit card, kids can start learning skills that last a lifetime, such as budgeting, saving and spending wisely.
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Here’s more about why giving your child a debit card might be the most valuable gift this holiday season.
Traditional Debit Card vs. Prepaid Debit Card
Before you get your child a debit card at your bank, weigh the differences between it and a prepaid debit card.
A traditional debit card is issued by the financial institution where you bank. It is linked to your checking account at the bank, which it draws on for funds. A prepaid debit card requires you to load it with money for purchases. It can be tied to a kid-friendly app to manage money, make transfers and set savings goals.
Gregg Murset, CFP, co-founder and CEO of BusyKid, pointed out that the legal age for getting a debit card from a bank or credit union is 18. However, he said that if your child is under 18, you can get a debit card issued to your child, but it will be tied to your existing bank account.
Instead of gifting your child a traditional debit card, Murset recommended opting for a prepaid debit card, similar to the BusyKid Visa prepaid card, which works in stores or online and offers the same card protections as other Visa cards. Other prepaid debit card options include Greenlight and Acorns Early.
“I think the prepaid card, like we offer through BusyKid, is the best option for a child 5-18,” Murset said. “The card works just like an adult card except it helps teach them how to manage funds, pay attention to balances and has the same card protections. When used with BusyKid, a child learns a balanced financial approach to managing money instead of just spending money through a regular debit card.”
Check Out: 3 Money Lessons To Teach Your Teenager, According to Financial Author Anthony O’Neal
A Valuable Gift
A debit card is a valuable gift that can teach kids about personal finance and budgeting in a hands-on way.
“Kids don’t learn much about money management in schools, matter of fact, the majority of high school graduates will never have a class about finances,” Murset explained. “So the only way to supplement what they need to know is either trial and error, or parents need to find something that will help them learn good financial habits.”
According to Experian, debit cards are a good way for children to learn “vital” financial information. They teach children about budgeting, spending and earning, and they allow kids to practice money management and develop financial habits from a young age.
This is a gift that will keep on giving for years to come. “The point is to let them build strong financial routines that carry over to adulthood,” Murset said of prepaid debit cards.
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This article originally appeared on GOBankingRates.com: Why a Debit Card Might Be the Most Valuable Gift for Your Child This Holiday Season
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