I've had a credit card from the time I was 18. It helped me grow a long history of excellent credit, which has paid off handsomely over the subsequent decades when doing stuff like applying for car loans and mortgages.

I still use it today for ~$20 per month in recurring monthly subscription fees, just to keep my longest-standing credit line active.

Started with something like a $500 limit, but for a while there in the 20s and into my 30s the bank kept raising my credit limit every year or two (unrequested), so it's currently at $11,500 despite the fact that I only ever spend about $20 per month on it these days, and pay it off every month.

Yes, cash. Teaches them to budget their money carefully and also basic math skills.

Spending cash just feels different than plastic.

All they’ve ever spent so far is cash. They have savings accounts in which they keep whatever money they earn or are given for birthdays, Christmas, and such. They’re free to use that money as they see fit.

The issue is how should I set up allowing them to pay for the things I would normally pay for?

For example, I’m not having my son pay for gas in the car out of his pocket since he’s going the places I was and would be driving him: school, practice, meets, etc. If I send him to the store or ask him to pick something up on his way home, he shouldn’t be paying for that either. I suppose I could make him pay for his meals when he goes out to eat with his teammates after a meet. On the other hand, he’s the team captain, and he busts his ass swimming with 4:30am-6:15am and 2:30pm-4:30pm practice on weekdays and 6:00am-9:30am practice on Saturdays.

Nor should my daughter pay for her food in New York City on her trip. By going with her club at school, she’s actually saving me a ton of money because they’ll be touring one of the schools at the top of her list, NYU. I don’t have to go, pay for the airfare for myself, the food for myself, 3/4s of the hotel room, etc. I figure she’s saving me close to 2 grand, plus I don’t have to go=almost priceless.

I got my oldest kid a debit card from https://greenlight.com/ when his high school club first went to Florida for a competition. You preload money onto it, can set spending limits, and get real time notifications on how much money was spent, and where it was spent through the app. The app also lets you lock the card that can be especially useful in the event of lost or theft.

You’ll need to link a bank account to this service. Once that’s done, you move money from your bank account to a “Parent’s Wallet” on the app and you’ll load the debit card from this wallet. The amount you load onto the card is ultimately what the spending limit will be. The child also downloads the app which allows them to see when, and how much is loaded onto the card and help them manage their money. The movement of funds is almost instantaneous which can be convenient if your kid calls and tells you of a needed purchase but there isn’t enough funds on the card to cover it.

In the app, you can place spending limits at places like ATMs, gas stations, grocery stores, restaurants and online gaming. Unfortunately, I have not used any of these features since I’m fortunate to have a responsible kid.

We’ve been using the basic service-which comes with a $4.99 monthly fee automatically debited from the parent’s wallet-for about 2 years now without any problems. Knock on wood, I haven’t run into any problems related to fraudulent charges, but since I haven’t loaded more than $300 on the card at any one time, I can afford to have that $300 tied up while I try to dispute the fraudulent charges.

I did have to call customer service for an issue when I first signed up. I cannot remember what the issue was exactly, but I think it may have had to do with changing my address. When I called customer service, I did speak to a live person who did not have a foreign accent and who was very helpful.

For teenager's spending that you would normally fund, but more money then you want them to carry in cash, a pre-paid visa card is the way to go. If you get one through your bank of CU you should be able to manage it online and track usage in close to real time.


I haven’t seen secured credit cards mentioned much.
When my son was getting into high school i set him up with a secured visa credit card through NFCU. It was tied to his savings account which we had opened for him when he was little. It had a $500 limit that was secured by freezing $500 in his savings account. It was still there but he could not access it. I used it to teach him a
How to use credit and he had all the skin in the game instead if me. In the worst case scenario, if he totally screwed things up, NFCU would close the card and use the frozen funds to cover it. No harm, no foul, no ding on his credit report.

He did well and after a set time period the card automatically converted to a regular CC and the securing fund in his savings account were released back to him. 20 years later, he still has the CC.

Check out a dozen ofFrank Abignale's
Videos on YouTube
He makes this a very easy choice.

quote:

Originally posted by oddball:

quote:

Originally posted by 12131:
Cash. When you run out, you can't continue to spend.

My son was, and still is, a remarkably responsible person, but when he was in high school, we used cash as his method of purchase, mainly as an allowance. There were a few times we got him a $100-200 Visa burner card for school trips and such to supplement his cash. If he spent his allowance, he has to wait until the next one. This taught him to save and budget.

That's a great way to do it. Kids growing up on plastic tend to not have the same connection to money that kids growing up using cash do.

quote:

Originally posted by trapper189:
Prepaid cards might work. I didn’t think about them, but I’ll look into them.

Jobs are of course great ideas, but I’m talking about the things I’d normally pay for. They can get jobs if they want, but my thinking is school is their job. With the time and effort they are putting in, the two oldest will both have Associates Degrees at 17 and they’ll qualify for 4 years of free undergraduate tuition at any Florida public university. Even at $15 an hour, I don’t think a job will be better for them from a financial stand point.

I’d trust the two oldest as authorized users of my cards. If that helps them build credit, that could be a way to go.

The youngest one thinks we need a $225,000 1996 50’ Viking to go fishing. He’s a bit of a dreamer.

I like the way the younger one thinks!

15 year old son has a very part time job and some of his own cash. Has a checking and savings at our local CU that I am also a signer in. He doesn’t have any idea how to write a check or even have checks. Has a debit card. I keep my eye on it and I see him hitting the soda vending machines in his high school. I remind him 2-3$ a day adds up.

Oddly many things are electronic only. School dance tix, football game in fact I think any event in the district is online tickets buy only. And most of the snack stands are debit only as they don’t want the hassle of kids handling cash.

What bothers me is he has asked a few time sir I can get him a credit card in his name to build credit. I’m like bro. There will be ample opportunities for you to go into debt in your life and I would prefer you avoid all debt like the plague.

^ I was thinking about this early on in the thread. I couldn't imagine not having a credit card today, since SO much of my spending is online. I sure don't miss mailing Midway and the like order forms and checks for reloading supplies.

Getting a card in his name early wouldn't be a bad thing... as long as you don't actually let him have it. You control it and what it gets used for.

Everyone is different. Some people can handle credit cards responsibly, some people cannot. I'm a fan of "use it responsibly and build your credit history early", but you're the best judge of your kids maturity level in that sense. If you can set spending limits, do it.

quote:

Originally posted by SpinZone:
For teenager's spending that you would normally fund, but more money then you want them to carry in cash, a pre-paid visa card is the way to go. If you get one through your bank of CU you should be able to manage it online and track usage in close to real time.


I haven’t seen secured credit cards mentioned much.
When my son was getting into high school i set him up with a secured visa credit card through NFCU. It was tied to his savings account which we had opened for him when he was little. It had a $500 limit that was secured by freezing $500 in his savings account. It was still there but he could not access it. I used it to teach him a
How to use credit and he had all the skin in the game instead if me. In the worst case scenario, if he totally screwed things up, NFCU would close the card and use the frozen funds to cover it. No harm, no foul, no ding on his credit report.

He did well and after a set time period the card automatically converted to a regular CC and the securing fund in his savings account were released back to him. 20 years later, he still has the CC.

This is the way to go IMHO.
While learning the value of cash is important the reality of the world today is that fewer and fewer people and businesses use cash. Even in remote parts of the world you will see the Visa or Mastercard logo when you shop.
I am definitely not a fan of debit cards as they don’t have the same consumer protections that you have with a CC. I will never have one.

Having a credit card like described above will give the child the experience of having to manage a little bit of credit as they move forward in life.

We have used Greenlight for all 3 girls for many years. it is a version of a visa card that we preload. Now that they are in college, I am thinking of getting them secured cards to start building their credit.

I got my daughter a kid's card from my credit card. She's 15.

I loaded it onto both the wallets for their phones. If the card is used I get a text message with what they just spent.
It's perfect for us and could not be easier.

Also, here in south florida, cash is going extinct and fast. Even the local highschool games you need to pay on an app for a ticket and cashless at the snack hut. Cash just makes no sense. I get the responsibility factor, but you are literally teaching them skills of 1920 when it is now 2020. You can't use the "cash in the pocket" as defense against bad decision making. You need to work on decision making now.

They need to learn how to track their expenses, cash or credit. I think we all agree that these kids will have electronic payments soon and better to teach the skills now not later.

Agree with a lot of suggestions and think it's all three or some combo thereof considering age...

Cash for smaller purchases, a debit/credit card with limits and notification to you, load it on their phone/watch for e-payments.

Cash because it works most everywhere and learning to manage cash is important, JMO e-payments are like Casino chips, you get chips so you arent betting with dollars and it's easier to lose track and you don't see chips like you see money going out.

E-Payments - because it's the future, and it's secure, but it's not everywhere, you can't pay at every merchant with ApplePay or GooglePay as they haven't upgraded the tech to accept it.

Credit card - because it's widely used, will work when E-Payment won't and if you need $50 to fill up the car and only have $10 of cash on you. Open the account in their name with you as a co-signor, that way you know it's paid but they get credit built up for the future.

All of this should come with requirements to bring in receipts, teach them to reconcile a bank statement, to be cognizant of what they spend and how much they have in the bank.

Here's what I do:

Kids get cash and/or Apple Pay for any day-trips up until 16. Apple Pay gets loaded for any overnight/multi-day trips.
At 16 (driving on their own in PA), I gave a credit card from my main account (Chase Marriott). This account does not allow limits, but does allow alerts for larger denomination purchases. Apple Pay is not necessarily a protected purchase platform like a CC purchase would be.

Apple Pay and some vendors limit purchases to $50 per transaction for minors. Any larger purchases will need to be split into multiple transactions. The vendor may/may not be willing to do this. We've had this happen at MetLife Stadium in NJ.

After first year in college I recommend my kids to get one card they can pay in-full each month. Kids each have savings acct. and debit cards, but I don't recommend online purchases with debit cards. My oldest didn't listen to me and lost a lot on a fraudulent Apple Pay transaction for a Nintendo switch sale when they were popular.

quote:

Originally posted by trapper189:
Jobs are of course great ideas, but I’m talking about the things I’d normally pay for. They can get jobs if they want, but my thinking is school is their job. With the time and effort they are putting in, the two oldest will both have Associates Degrees at 17 and they’ll qualify for 4 years of free undergraduate tuition at any Florida public university. Even at $15 an hour, I don’t think a job will be better for them from a financial stand point.

Gotta agree with this. I worked from high school on, especially in college. For me it was more for my sanity than anything else. Our son wanted to work in college. I told him he was an adult and could do what he wanted, but that he was on a full ride scholarship from his parents and we considered school to be his job. I don’t think working is a bad thing, kids need to learn how to work. I do think it is important to think long term and balance current earnings against the opportunity cost of what is missed working.

Warning - our kids are now raising kids so I'm a bit out of date...

We had a credit card for each kid. The card had modest limits (so nobody could go crazy and protection against theft). We told them what we'd pay (stuff like gas for the car - provided they got good grades). If they bought anything else they had to repay us when the statement arrived. That got them in the habit of checking the statements every month and making sure the balances were paid.

I've never been a fan of debit cards. We used credit cards. Also not a big fan of Apple Pay (or similar options). But didn't have to consider that technology when we made our decision.

When my daughter was 12-13 we had to make the same decision. I had a friend who had gotten her daughter one of those reloadable cards. I looked into that and the fee was $4.95 per month. I thought, "Well, that's a waste, that's $50 per year I could give to my daughter."

So, I just added her as a user to my Capital One credit card. She is now 15 years old and a very responsible kid and has not made a single purchase of which I would not approve. It's mainly for grabbing food while out with friends, eor eating while traveling for softball or traveling for band, etc.

For us, the CC has worked just fine.

The trip happened. She had a great time. They killed Hitler, averted WWII, but started WWIII. I don't pretend to understand the real UN, let alone Model UN.

I tried to get her on my credit card, but they said only one extra authorized user, that's my wife.

We went the gift card route which worked well. So well, that a couple of the other students gave her cash to use her cards at places that wouldn't take cash. There went the plan to not have her carrying a wad of cash. I tried.

The fear of losing it was not unwarranted. One of the students "lost" his wallet with his cash at the beginning of the trip. I'm guessing it was stolen.

She didn't have to buy a plane ticket, but it was close. Their flight out that was supposed to get into Ft Myers at 11:20pm, didn't get in until 2:12am. I was sick as a dog which didn't help when I went to pick her up.