Being financial literate is no longer an option, but rather a necessity. As adults, you will face several financial incidences, which require appropriate decisions, strategies and planning. At such a time, being financially ignorant will not only cost you but will also allow you to lose out on an opportunity for better financial investment.
The best to be educated about finance is by starting young. Your kids, in fact, have a better opportunity to become financially aware and experienced at a young age. All you need to do is introduce the debit card to them. But how will this bank card will work in their favour?
Here are some tips that can help them:
Learning all about account fees and minimum value: Most of the debit cards are linked with a bank account. This an ideal opportunity to acquaint your child with how banking accounts function. Most banks allow joint accounts with a minor. Therefore you can also invest a small amount of funds now and then. At the same time, you can teach your child about maintaining the minimum balance and maintenance fees. This way, your child can learn to manage and limit withdrawals from the joint account. Similarly with the fees, get your child to understand the fee structure and how the funds in the account will be charged for them. Encourage them to communicate with the bank on how to manage the fees and how to reduce them.
Managing funds: Urge your child to get into the habit of reviewing his or her debit card statements, physically or online. Suggest that they sign up for email or text alerts, especially if the bank account funds dips below a certain value. You can even opt for apps that can help track account balances, which will go a long way to managing spending and budgeting.
Explore the card features: Most of the different types of debit card comes with various features. For example, certain cards come with protection, which helps provide protection against unauthorised purchases or even reduce the unlikelihood of fraud. You may even sign up your child for ID theft alerts. Some cards even come with price protection which means, if your child has found a product with a lower price on an item within a specified amount of time after purchasing it at a high price, you can get the difference between the price you paid and low advertised price.
Debit versus prepaid card: While there plenty of different types of debit card that can be used, there is also the choice of prepaid cards. A prepaid card is an independent card minus the link to a bank account. You only need to load the funds on the card for spending purposes. There is a benefit of your child not racking up overdraft fees with a prepaid card. However, it also restricts their financial learning.