Should you let your child own or operate a debit or credit card? | The Financial Express

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The importance of savings and investment is an important value that must be inculcated from early on. This will help one understand the golden rule of investment- to start early.

debit credit cared for childrenRepresentative image

Kids today are more tech-smart than previous generations. But when it comes to finances or money, they may have a lot to learn from elders – especially about the significance of savings. In view of this, it becomes debatable as to whether one should let his/her child own or operate a debit or a credit card on their own.

Legally, some banks in India provide debit cards and bank accounts for kids as a way to instil some confidence in them for handling money and savings. Bank credit cards are not allowed to individuals below 18 years. These days some new fintech companies like are offering prepaid cards for children and these can be used for online as well as offline spending.

Several industry experts say that it would be wise to make the children learn how to use debit or credit cards. But with certain restrictions, usage tracking and education.

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“Giving increasing levels of financial responsibility to children is prudent. As long as the ability to pay – be it with cash or with cards – is paired with a healthy and age-appropriate financial education that’s parent supervised, the act of giving a child a card to use may indeed be healthy with the additional monitoring and supervision opportunity it affords,” Utkarsh Sinha managing director Bexley advisors, told FE Online.

The importance of savings and investment is an important value that must be inculcated from early on. This will help one understand the golden rule of investment- to start early.

According to Anshul Gupta, Co-Founder at Wint Wealth, there are some pros and cons of letting your child own a debit or credit card:

Pros- It’s a good way to build financial habits and introduce them to the concept of saving money.
Cons- Sometimes transactions may have hidden or extra charges that children may not understand early on.

“While these cards are handy to set saving habits, the access to ‘spending’ at an early age could do more harm than good if children aren’t explained the consequences of overspending. Parents must ensure to educate their children on the ideal way to use Debit and Credit cards and must be encouraged to spend wisely and in a cautious manner,” Gupta said.

No need to give credit cards to kids

Anurag Garg, founder and CEO of Nivesh.com says that a child can be given a debit card however not a credit card.

“As such a child who is living with parents should not require debit or credit card. However, a Credit/Debit card can be given to children above a certain age (say 16 years and above) for personal expenses within a set limit and also a periodic review should be done by parents of the expenditures being made and a limit on the amount that can be spent,” said Garg.

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According to Garg, a debit/credit card at an early age can be positive as well, if parents are able to teach their children on how to use such facility in a proper and judicious manner:

  • Tracking expenses with banking apps, online tools, and text alerts
  • Creating a plan for monthly spending using allowance and earnings
  • Understanding wants vs. needs
  • Making safe debit card payments using a mobile phone

Debit cards offer a tangible way to make the connection between the value of money, spending and the goods or services received. While the same objective can be accomplished with cash, debit cards and digital payments are quickly becoming a more common payment method.

“A debit card can also help kids learn from mistakes if they have some freedom to make spending decisions. For example, your child may want to spend all of their summer job earnings or pocket money on a new video game system, against your advice. They may end up regretting the purchase later, but that can be a valuable lesson if they learn from it and don’t repeat it down the line,” said Garg.

“Prepaid cards are a good option as they can avoid overdrafts since the child can only spend the money that’s on the card. However, it’s still important to help kids limit spending and monitor their card balance,” he added.mail logo

Wondering where to save, invest, and how to save taxes? Subscribe to Financial Express Money weekly newsletter for all your personal finance queries.

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