Parenting Semi-Adults: Debit Cards
Monday, July 14, 2008 at 12:37PM Our older daughter has a job and her own checking account with that handy little debt creator, the debit card. Yes, I have written the correct word, debit, not credit card. Having been through this once with the older son, we were prepared for the debit card learning curve, even so this particular child threw us a curve ball.
We allow our kids student checking accounts because they are “free” with our master checking account. Free is in quotes because while the bank doesn’t charge for use of the account either by checks or by debt card, the kids inevitably over draw their accounts and the bank makes a killing on the fees and surcharges. It took several cycles with the oldest before he got the notion that overcharging your debit card is a bad financial decision. We linked the kids' accounts to ours for overages so our account was charged ten dollars in fees instead of theirs being charged twenty-five. The offending overcharger had to repay any loss to us due to their foolish behavior.
Because we never have overages there were thing we didn’t think to explain to our oldest. As parents, we assumed the he would understand that using your debit card when you have no money in the bank wasn’t a good idea. He got that concept in theory. It took him a while to understand what no money in the bank meant.
* If you deposit a check, you do not have access to that money until the next day. If it is a personal check, your bank can, at its random discretion take up to three business days credit the money to your account.
* If you use you debit card, than check your balance later in the day and there is money in the account, you can not assume your earlier purchase has been deducted from the balance and you still have money to blow on pizza in the bank.
* Yes, we are going to make you pay us back for any fees you incur from spending more than you have in the bank. If you were paying by check, this is called check kiting and it is a crime. Until you pay us back…you still have no money to spend, hence no money in the bank. Yes, again, you will pay us first out of your very next paycheck.
We explained this to our second child. Since there is something about young adults that makes them think the rules don’t apply to them, it took her several overages for her understand that overdrawing your account was not good stewardship and again, yes, you will pay us first for any charges to our account due to your lack if responsibility.
She through us a curve ball. She had several overages. She insisted that that was impossible. Post cards from the back and posting viewed on line proved nothing. She had not misused her debit card. Matter of fact, she had not paid by debit at all, but by credit. “How could this be since she doesn’t have a credit card?” we, her parents wondered.
She explained,” When I pay, they ask if it is debit or credit. I say credit.”
“Darling daughter, I your mother have already explained to you, that you can’t charge using a debit card. No matter what the clerk asks, you account is hit right away.”
This was her answer after her father (with me present) explained how debit cards work for the second time.
“I though mom was wrong”
Grrrrrrrrrrrrr.
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Reader Comments (7)
We are going through the same learning experience at our house. Luckily, Sweetpea has only overdrawn once and she had to pay the $15. But we have had to impress upon her the need to keep a check register even with a debit card. It adds up so fast. Then there are those "charges" that don't show up right away on your account. Better to learn now while we can watch her like a hawk.
A check register, I forgot to mention that. Good point Marue. Thanks for bringing it up.
How do you have your kids pay back the overdrafts? Do they pay you monthly? I wonder if a prepaid debit card could work for them. Once they spend $100, that's it. No overdraft charges. I never had a checking account until I was in college and did not have the luxury of having accounts linked to my parents. You children are very fortunate.
Since our kids were/are living at home during the debit card learning curve we know when they are getting paid and we are right there with our hand out to be repayed for the fees.
Prepaid debit cards are a good idea for younger teens. Ours are legal adults. They could open up independent checking accounts. We linked the checking checking accounts to be a help to them as they understand money in the real world. If they continued to have overages, we would unlink the accounts and let them experience the full consequences of their foolish behavior.
Linking our checking accounts is for a limited time and a specific purpose.To help the kids understand how a checking account works. If they refused to learn, the protection we provide would be removed....in the end experience is a tough teacher.
I didn't get much of an education regarding finances when I was growing up. You're doing your kids a great kindness!
That second to the last line is priceless!! I nearly fell out of my chair laughing!! Thanks Carol.
Take good notes! Better to blog than to yell.