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Future Entrepreneurs: Credit Cards For Kids to Teach Financial Responsibility

By: SmallBizClub

 

a teenager using a credit card to make an e commerce purchase

Every parent wants to prepare their child for a future and financially comfortable life. If you haven’t provided your children with a financial education, children can easily get into debt and not even understand why.  From buying a car to their first house, children need to know how to get and use credit. The best way to do this is by getting them a credit card for kids.

There are a few things you should consider before giving your child a credit card. One of the most important factors is your child’s age. You obviously wouldn’t want to give a credit card to a young child, but a teenager could benefit from having one.

Another factor is whether or not your child has any income like odd jobs or allowance. If they don’t have an income, they may not be able to handle the responsibility of paying off their debts each month. It’s important that you only give them a credit limit that they can realistically handle.

It’s also important to consider the type of credit card you’re going to give them. There are secured and unsecured credit cards for kids. A secured credit card requires a deposit, which acts as collateral in case your child doesn’t pay their bill. This is a good option if you’re worried about your child’s ability to handle credit.

An unsecured credit card doesn’t require a deposit, but it does come with a higher interest rate. This is because there’s more risk involved for the lender. If your child doesn’t make their payments on time, the lender could end up losing money.

Credit cards for kids offer the possibility of investing, saving, earning as well as donating money within the application. Everything is somewhat reminiscent of the adult world, but in this case, the parents have their children’s backs and cannot go into the red.

There are various ways that your children can learn to be socially aware and balanced with their use of money.

Money does not come from magic boxes (ATMs)

You have to explain to children how the world works, and that parents have obligations that they must fulfill to afford them a normal life. 

And that there is a difference between what is more necessary to spend money on, such as rent, bills, food and drink, clothes, and shoes. This does not come from magic trees, but from the effort and hard work that parents do.

There are also other expenses, such as going out to eat at a restaurant, buying a new toy, or going to the movies. It is important that children know that this type of expense is not considered essential and that it is not always possible to make them.

Cards as a tool for learning financial literacy

What prepaid debit cards offer is the ability for parents to open an account for their children over which they have complete control. Children have tasks and responsibilities that they must complete within a given time limit. 

Each task table can be adapted personally to each family. Children can learn through this card how to save money, invest in shares, and donate money, but also earn through various bonuses and payments. 

Parents can establish bans on companies, brands, and sites that they consider unsuitable for their children.

Savings and putting them on your payroll

Encourage your children to save, teach them to be patient, and to wait for a certain moment. 

Older children always need more money, so why not use this application to put your children on the payroll and thus pay them additional bonuses, pocket money, and payments from a third party? 

Encourage small entrepreneurs in them to help their neighbors, mow the grass, take out the garbage, go shopping, and so on. Children sell lemonade in the summer, and in the winter they clean the neighborhood and collect it together with their owl friends. 

The innovation of BusyKid, for example, is that a third party can deposit money into the account with a QR code, which is the perfect way to send a gift for birthdays, holidays, and various occasions.

In short, these are just some of the advantages that parents have when they decide to give their children a credit card. It’s important to consider all of the factors before making a decision. Give your child a credit limit that they can realistically handle and make sure they understand the responsibility that comes with using a credit card. With the right guidance, your child can learn how to use credit responsibly and build good financial habits that will last a lifetime.

Top 3 picks

The top 3 choices for debit cards and building credit from an early age are with BusyKid, GoHenry, and Copper.

  • BusyKid

BusyKid is one of the leaders in this industry, they have won numerous awards. They offer more than a chore and allowance application, they offer a savings plan, the possibility of investing in global stocks, making and receiving payments as well as charitable donations. 

Thanks to BusyPay, it offers the option of bonus payments, third-party payments with a QR code, pocket money payments, as well as donations to various charities. 

Parents have control over the child’s account and create special tabs with tasks that the child wants to complete. 

There is no minimum age for this option. With the option of 5 cards for $3.99 per month, while the annual price is $38.99 where you will save 20% of your money. 

It is one of the first choices of parents and has ensured financial independence for many children and prepared them for the future.

  • GoHenry

GoHenry is also a prepaid debit card for its users aged 6 to 18 years. This is a slightly more expensive option, and the price per child is $3.99 per month. 

The application is designed to control the performance of tasks and obligations within the given time limit and to maintain the limit of how much the child can spend on the account. 

Kids can spend, save and donate within a dedicated club within this app. Here there is a method of locking savings and not the possibility of accessing money.

  • Copper

Copper debit cards are one of the newer ones on the market, but they are slowly climbing toward the top, the age limit is from 13 to 19 years and it is completely free. 

This is one of the reasons why their demand has increased because it is available to everyone. Here you check into a digital account, you can monitor your activity in real-time, send and receive money between linked accounts.

You can use it to shop online and in stores, as well as get cash at ATMs. There is a spending limit that the parents set and they have control over the account. It is one of the most downloaded apps in recent times.

Published: October 27, 2022
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