Kids' Bank Cards: How Do They Work?
There are several types of kids’ bank cards. Debit cards, prepaid cards and simple cash cards for kids all exist, providing you, as a parent, with a variety of options when looking to teach your child about the world of money. Discover which is best for your child below.
Giving your child cash as pocket money may no longer be the best option. We live in an increasingly cashless society, and many of the items your child will want likely only exist online.
At the same time, it can feel like a big step entrusting them with their own kids’ bank card. However, there are a number of different options, with varying levels of responsibility, to suit your child, whatever stage they are at.
Read on to discover more about the different kids’ bank cards that are available, and how to apply for the one that is right for your child and your family.
What are kids’ bank cards?
There are three main options when considering kids’ bank cards.
The first two are tied to opening a kids’ bank account. Once open, you will have a choice of a debit card or cash card.
A cash card for kids allows your child to withdraw money at an ATM, whereas a kids’ debit card also allows them to spend in store and online. Both would come free with the children’s bank account.
The third option is a children’s prepaid card. This card isn’t attached to a bank account, but rather a pair of apps: one on your phone as the parent/guardian, and one on your child’s device.
You preload the app with the amount of money you’d like your child to have. This can be through one-off top-ups, or as regular transfers if you want to replicate their pocket money schedule. Your child can then spend in store and online, or withdraw from an ATM, using their prepaid card. If you want to limit where they are spending, you can do this too.
Children’s debit cards vs children’s prepaid cards
There are benefits to both kids’ debit cards and prepaid cards. Which is best for you will depend on what kind of responsibilities you want to give your child.
A debit card is free and attached to a children’s bank account.This could be a good starting point for your child before they get their first proper current account.
One drawback to a bank account is parents can’t keep as close an eye on their child’s spending. You could have the login details and check online or check postal statements, but a prepaid card gives you much more oversight and control.
With a children’s prepaid card, you can limit their spending and block the card from being used in certain retailers. You can also get instant alerts when they use their card. A downside? Most prepaid cards come with a monthly or annual fee.
Because of the increased control with prepaid cards, they could be better suited for younger children, with bank accounts and debit cards reserved for teenagers who may be earning their own money and ready for more financial independence.
» MORE: Bank accounts for teenagers
Pros and cons of kids’ bank cards
There are several significant benefits to giving your child a bank card, but there are some drawbacks that you should be aware of too.
Benefits of kids’ bank cards
- Learn about budgeting. Pay your child a monthly allowance and explain to them that the money has to last them for the next four weeks.
- Avoid carrying cash. For example, if your child is going away on a school trip, a card means they don’t have to carry large amounts of cash.
- Security. If your child loses their card, you can deactivate it to protect the money. You can’t do this with cash.
- Control. By checking their statements, or checking the app linked to a prepaid card, you can see how your child is spending their money.
Drawbacks of kids’ bank cards
- Easy spending. If you gave your child a debit card tied to the account their savings are in, they could eat into their savings. It might be advisable to have a separate children’s savings account, which they cannot access so easily.
- Monthly fees. Most prepaid cards come with monthly or annual fees. You’ll need to compare these if choosing a prepaid card.
- ATM fees. Watch out for cards – and cash machines – that charge a fee for cash withdrawals.
How to get a kids’ bank card
If you want to get a debit card or cash card for kids attached to a bank account, read our guide to children’s bank accounts to find the best option for your family.
If you prefer a prepaid card, you’ll want to shop around and then apply either online or via an app. Some are all-purpose prepaid cards, which many adults use for help with budgeting or to take overseas, while others are specifically designed for children and young people, with features to help their parents monitor and control spending.
What happens to the kids’ bank card when my child turns 18?
If you have a bank account with a debit card, then the account will likely be converted into the bank’s adult current account.
With children’s prepaid cards, it depends on the provider. These cards won’t be changed into an adult version, as most don’t have an adult equivalent. Instead, your child may be able to use the card until it expires.
Ruth is a freelance journalist with 15 years of experience writing for national newspapers, magazines and websites. Specialising in savings, investments, pensions and property. Read more
Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more