Dave Says: Financial Responsibility

41% of 2016 graduating seniors had credit card debt, averaging $3,000.  

Dear Dave,  

I’ve seen lots of companies marketing prepaid debit cards for kids. They seem to position them as a way parents can set spending limits for their children. Do you think these are a good idea? It seems to me they are just a form of conditioning kids to rely on cards. 

– Keith 

 Dear Keith, 

I agree with your assessment. I don’t recommend prepaid debit cards for children, except in very unusual situations. Let’s say your kid was going on a trip, and you wanted him or her to have something in their pocket for limited access to cash. But if they’re old enough and responsible enough, I’d rather them have a traditional debit card attached to their own account. 

What I really want parents to do is teach their children how to work, give, save, and spend wisely. It’s all about teaching your children to become good adults, and handling money is part of the equation. How does that apply to something like a prepaid debit card for a kid? For the child, they’re looking at it like mom and dad are an ATM. They don’t equate it with real money unless they put their cash into the card. 

 I suggest helping them open a checking account with a debit card attached around age 15 or 16, provided you have taught them—and they have demonstrated— wise money management practices up to that point. Teach them to reconcile and balance the account, and walk with them when they do this so they don’t slip into the idea a debit card is some magical portal to free money!  


 College Students and Credit Cards 

The Credit Card Act of 2009 limited credit card approvals to teens by requiring that anyone under the age of 21 have a cosigner or be able to prove they have sufficient income. But the law doesn’t specify what counts as income, which means some teens may still qualify for their own credit card. In some cases, credit card companies may pay colleges large fees for the privilege of offering students credit cards on campus! Here are some stats to keep in mind: 

41% of 2016 graduating seniors had credit card debt, averaging $3,000.  

Those with student loans had a higher credit card balance, at $3,176. 

Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored five New York Times best-selling books. The Dave Ramsey Show is heard by more than 8.5 million listeners each week on more than 550 radio stations. Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.  

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