Debit cards for people under the age of 18 can be a tricky question. As there are no credit implications they are easily available to people younger than 18, but it may be a question of whether the person is ready yet.
There are two types of debit cards available to those under eighteen, normal bank account linked debit cards and prepaid debit cards.
There are a limited amount of banks that offer current account linked debit cards, although this number is likely to grow as the cards are widely offered by many bank’s overseas subsidiaries. These cards are linked to a current account in the same way that a cheque book is in that all payments go straight off the current account. Unlike many account holders who are over 18 there is no possibility of an overdraft as there are age limits on taking out debt.
The other way of using a debit card is to take out a prepaid debit card. These cards can be used like a normal debit card, which means that they can be used on the internet or at shops. However, they are not linked to a bank account and have to be consciously topped up before they are used.
This may sound similar to a debit account that is linked to a current account, particularly as there is no overdraft facility, but there is a crucial difference if the young person holds a job and the employer automatically pays the money through a bank transfer. The bank transfer also needs to be done as a separate step, although a standing order can be done. In the same way an allowance or pocket money could be set up automatically by parents or other relatives.
An alternative is to give one off gift cards. These can not be topped up. They can be a good way of giving money as they are easier to replace than cash if they get lost in the post. They can also be a more personalised experience than getting a present as notes.
Just as giving regular pocket money or an allowance is a way of a young person learning financial responsibility, so is giving a prepaid debit card. As with all these steps there is a degree of allowing the person to make some small mistakes in order not to learn to make big mistakes. The age at which each young person should take this next step in financial responsibility varies according to their current attitude towards money.
