Once upon a time, banking for kids was a simple matter of dropping pocket money into a piggy bank and tipping it out again when they needed cash. But not any more!
Having their own bank account helps teach children about the importance of saving money. But now that we’re becoming much more of a cashless society, what happens when your child wants control of their money and getting cash out of an ATM for them just isn’t going to cut it?
Each bank has its own rules when it comes to giving youngsters access to electronic funds. Some won’t issue eftpos cards to children under 12; others will but insist that children under 13 obtain permission from their parents. Kids over the age of 13 can usually apply for their own card, but their parents may be needed to sign a guarantee.
Unfortunately, because they’ve grown up seeing their parents handing over a piece of plastic to pay for things, some children don’t understand that the payment is only possible because of money that has been saved and is sitting in the bank.
It needs to be made clear to young teens who are opening accounts that they can only spend the amount of money that they have saved in their account and can’t use their card if there aren’t enough funds available.
Of course, that‘s not the case with credit cards and it’s probably a very good thing indeed that they can’t be issued to anyone under the age of 18. This can be understandably frustrating for teenagers who want to make purchases online and need a credit card to do so.
The solution may be a Visa or Mastercard debit card. These can be used wherever credit cards are accepted but because they’re linked directly to a bank account, the cardholder can only spend the money they have in that account – they don’t get any credit. These cards can also double as an eftpos card.
Rules regarding who can have a Visa or Mastercard debit card also vary between banks. In some cases, you have to be 15 or older to apply and if you’re under 18, a parent or guardian has to sign the application form and possibly also visit the bank in person to accept the terms and conditions.
Others make the cards available to customers over the age of 13, but those aged between 13 and 15 have to provide authorisation signed by a parent or guardian.
Your child will also want to download an app from their bank onto their smartphone, tablet or computer so they can keep a close eye on their spending and saving. They can also use this app to make online payments.
If you have any concerns about your child being able to manage their money sensibly, it may pay to make it a condition of them getting their own account that you have access to their log-in details so you can also go online and check what they’ve been up to.
And if you want to keep even closer tabs on them, it might be a wise move to open a joint account with them.