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Debit and credit cards: How young is too young?

As a parent, you're fully aware that your children will one day hold their own credit and debit cards. Perhaps they've already asked you for payment cards. But here's the million-dollar question: when should you grant your kids access to debit and credit card?

Wondering what age is appropriate to give your children access to electronic payment methods is a constant preoccupation of any parent, says Marilyne Perron, youth advisor at Caisse Desjardins de Sillery—St-Louis-de-France.

She believes the answer isn't an issue of age, but rather of need. Some kids prefer managing their money using a piggy bank, because they have a hard time understanding that a debit card is a method of payment. To learn more, read Graduating from the piggy bank to the savings account.

Teenagers experience and discover new things, which in turn lead to new needs. Setting up savings goals and making that special purchase using a debit card when the time is right is an educational way to initiate your kid to payment methods.

“High school kids are usually earning a modest income, as they're offered babysitting jobs or work as ski instructors. Furthermore, at that age, kids tend to receive gifts in the form of cash and cheques from their family,” Marilyne Perron explains. “This age also marks the start of sports and humanitarian trips taken without parents. This whole range of new experiences can be made easier by using electronic payment tools.”

Debit cards

To handle the income from that first job, your kid may need a debit card to access their account.

To obtain debit card, your child must open an account in their name. “It's important to impress upon your kids the security measures that must be followed when using a debit card,” the youth advisor adds, as certain practices may place your child in embarrassing situations. “For example, when a teen shares his card's personal identification number (PIN) with a friend for practical purposes, or deposits an empty envelope at the ATM to withdraw money with the reasoning that a paycheque will be deposited soon. Another example is a teen who agrees to cash in a friend's cheque as second endorser. These are all instances that could have a negative impact on your child's financial reputation,” Marilyne Perron warns.

Credit cards

Credit cards are a wonderful tool to provide your child with their first experience with credit and build a credit rating. However, you should ask yourself whether your teen truly needs it, and, if so, the conditions surrounding its use. For example, should your child travel without you, a credit card would be useful for making purchases. “Parents have 2 options,” Marilyne Perron explains. “The first one is be to obtain a reusable prepaid card, which is free for kids under the age of 18. It follows the same principles as a gift card.”

The second option is providing your teen with their own credit card. If you child is under the age of 18, you'll have to request a credit card and add your child's name as a secondary cardholder.

A few tips

It is essential to educate your child about the sound use of credit and debit cards. “Of course, they need to understand the credit basics: balance, interest rates, minimum payments, cash advances, etc.,” says Marilyne Perron. “But first and foremost, we must go back to what's essential: the budget!”

In order to become smart consumers, teenagers must be aware of their own spending. That's why it's essential that they take a good look at their account and credit card statements and analyze their purchases.

“Drawing up a budget can be an unpleasant task, even for many parents,” Marilyne Perron stresses. “I actually enjoying drawing up budgets, and that's why I help others with their own. I often meet kids, with or without their parents, to draw up their budget, discuss credit-related issues, and to make them aware of how important it is to manage their finances. Sometimes, the message is clearer when it comes from a youth advisor instead of your own parents!”

To do with children