The Bank of Mom and Dad
Written by Andrew Roth
As a follow up to my article, “Investing In Education” (October 20, 2020 blog), I wanted to share with you a series of products I recently became aware of—child and teen debit cards designed to help parents grant their kids a level of familiarity with money while providing some control and oversight.
Christy Frost from the Lee Stoerzinger team recently shared that she was having difficulty getting her bank to approve checking accounts paired with debit cards for her minor-age children (ages 14 and 11). In her case, the national institution her family banks with would only issue savings accounts to minors, not checking accounts, and having parents co-sign was not an option. So she turned to one of these alternative card programs to provide some additional autonomy to her kids and found that it came with some great extra features.
Cards like Greenlight (greenlightcard.com), Current (current. com) and others are tailored for families with kids and teens. These cards typically come with a cost—either monthly or annually—but allow parents a myriad of functionality through integrated apps to deposit money into their kid’s accounts, establish reoccurring payments (i.e. allowances, etc.), approve certain merchants while disallowing others, track transactions, and establish alerts. Some even have the ability for parents to establish “interest” on money their child is saving to reinforce deferred gratification. Christy really likes how the app makes it easy for her children to split up their money into different categories – savings, spending, charity, etc. - as needed. She also found the service was easy to link to her daughter’s Venmo account, allowing her the option to split payments or pay back friends electronically.
As more merchants do business electronically, I can see the value of these programs to provide middle and high-schoolers with a way to easily experience some financial independence while still retaining parental control.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.