Credit Cards For Kids: Helping Your Kids Build Wealth Through Saving

Credit Cards For Kids

Credit Cards For Kids: Introducing a child to credit cards can be stressful and requires a lot of effort,  it takes a gradual process, but it is necessary for them to learn about it.

What Is a Credit Card

A credit card is a payment card that is issued by a financial institution that enables the cardholder to borrow funds and purchase goods and services in stores that accept cards for payment. There are conditions by which the cardholder pays back the borrowed funds and possibly with interest within a given time.

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Why Do Kids Need To Know About Credit Cards?

It is important for children to learn about credit cards at an early stage, not just learning but also creating healthy financial habits and money management in them. By this, there’ll avoid common financial mistakes as young adults.

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However, the best way to teach your kids money management is to be an example yourself. In other words, the way you handle your finances and credit cards like a responsible adult helps your kids to follow suit. If not well managed, they may choose to purchase things with credit cards that you might be unable to avoid.

Getting your kids credit cards offers a teen the opportunity to build a credit history. But before offering a teen a credit card, the first best is to get them a prepaid debit card, load funds, and monitor their spending. You can set their spending limit, where they can purchase and how much they can spend.

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This puts a check on them, thereby training them on money management, while it also gives them a sense of responsibility and financial independence and if they can’t spend what’s not available on the debit cards, they can’t withdraw more money. 

One may ask, why is important for a minor to get a debit card before advancing to a credit card?

  • Debit cards enable and train your child to avoid common financial mistakes as a young adult and instill in them a sense of financial responsibility and independence, though it will take a gradual process.
  • As a parent, you can set a spending limit on the amount and location of your child’s debit card to avoid unnecessary spending. 
  • Some debit cards come with applications that allow the payment of some bills to your kids as part of their expenses; like Disney subscriptions, cellphone bills, etc.
  • Funding your kid’s accounts with a monthly or weekly allowance and making them understand that the money has to last them through a given period of time, will enable them to save. 

Moreso, there are credit and debit cards with exciting apps and offers for your kids and teens which you have to consider:

6 Best Credit Cards For Kids

#1 Copper Banking

First and foremost, teens can learn about money management through Copper Banking. The majority of other banks don’t have real-world examples and a focus on education. In addition, the Copper Banking app and debit card, in contrast to conventional banks, are created with teens and their parents in mind.

A consolidated MasterCard check card works with spending at this stage for teenagers. Additionally, parents can monitor their teen’s spending on the app, so they need not be concerned about their child’s reckless spending with a Copper debit card.

Additionally, Copper Banking has made it easier, faster, and less expensive for parents and teens to send money to each other. You can use the platform to electronically deposit money into your teen’s account as a parent.

In addition, parents can now talk to their teens about their spending habits and explain why daily and monthly spending limits are important. As a parent, you can help your children learn how to manage their money and spend it wisely.

#2 Chase First Banking

Parents and children alike will be able to access their account information by downloading the mobile app.

Limits on what their teen can spend, such as $25 on dining out or $40 on shopping, can also be set by parents. With this feature, parents can assist their children in becoming familiar with the concept of budgeting.

And if your child needs to withdraw funds, they can easily do so at any Chase ATM without having to pay a fee. Parents can even limit the amount of money their children can withdraw.

Parents will also be able to set up alerts to be informed about their teen’s purchases. Additionally, parents will be able to accept or deny a child’s request for additional spending money through the app.

Kids can use the app to set savings goals and begin putting money toward them, in addition to the account’s debit card features.

Because the app does not pay interest on any money that is saved or deposited, you might want to think about opening high-yield savings account for your child if you want them to earn some interest on their balance.

An account with an APY of 1.85% and no minimum balance is available from Ally Bank. Additionally, it has a “savings bucket” feature that enables users to create distinct buckets for various savings objectives.

#3 Gohenry

“It’s proven that money habits are formed early in life,” GoHenry writes. Because of this, they want to assist your teen in developing financially responsible habits.

GoHenry is an application and debit card that provides “unique parental controls for young people aged 6 to 18.” Parents can limit where and how much their children spend on the app.

Users can set savings goals and put money aside to reach those goals for $3.99 per child per month.

#4 Busy Kid

Kids between the ages of 5 and 17 will appreciate the Busy Kid credit card. It aids parents in teaching their children money management and responsible spending.

The prepaid debit card, when used in conjunction with the Busy Kid app, provides children with an opportunity to practice saving and real-world money management while also earning money through allowances and/or chores.

Through the app, parents have full control over their child’s account and can set limits or require spending approval. To facilitate gift-giving, share your child’s BusyPay QR code with family members.

Parents can assist their children in developing responsible spending and saving habits for a monthly fee that starts at $3.99 per family.

#5 Greenlight

A Mastercard debit card for children is offered by Greenlight, which is known as “the debit card for kids.” It lets you choose the stores where your kids can spend money, and it costs $4.99 per month per family.

Guardians can likewise pay recompense for errands straightforwardly to the card, constrained by a downloadable application.

Additionally, it serves as a teaching tool: In “Spend, Save, and Give” accounts, children can keep track of their balances to encourage responsible spending, budgeting, and even charitable giving.

#6 FamZoo Prepaid Card

An excellent alternative to credit cards for children under the age of 18 is available if you wish to keep the training wheels on.

Due to the fact that both parents and children have access to the same account, the FamZoo prepaid card is an excellent option. A family’s FamZoo subscription costs $5.99 per month, with discounts available for annual payments.

There are various protection features with FamZoo, whose tagline is “preparing kids for the financial jungle.”

The card can be locked or unlocked, and its users can even be connected to various chores. For instance, you can advertise chores that you will pay for with FamZoo. The FamZoo app allows your children to mark completed chores as completed and receive automatic payment.

The Age To Own a Credit Card

Firstly, a minor must be up to age 18 before being eligible to get and own a credit card. Even after being eighteen, you’ll be faced with barriers before obtaining your card by yourself.

But if a parent wants to get a credit card for their kids, they must think seriously about adding them as explicitly allowed or authorized users to their own account.

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However, there are conditions that an eighteen-year-old needs to meet before receiving a credit card, they are:

  • Required to have a job or other source of income.
  • If there’s a satisfactory reason to demand it, they are eligible to use a third-party income.
  • Must have a registered Individual Taxpayer Identification Number or Social Security Number.

In summary, minors(kids and teens) need to know about credit cards, money management, and other things pertaining to money before advancing to a major(adult). Parents have an important role to play in order to make it happen.

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