Prepaid kids' debit cards are a great way to teach your child about money. They work just like regular debit cards, but funds are preloaded onto the card instead of being drawn from a current or savings account. In this blog post, we will discuss how prepaid debit cards work so you can choose the right card for your child.
Related: What age can you get a debit card?
What is a prepaid debit card?
A prepaid debit card is a card which you load money onto in advance. You can then use this card online, in-store and at ATMs. As you can only spend the funds preloaded onto the card, prepaid cards are a good option for young people and those who don't have access to a traditional bank account or who want to budget their money.
Related: Prepaid debit card vs. bank account
How do prepaid debit cards work?
Prepaid debit cards work like regular debit cards, but instead of being linked to a bank account, they are loaded with money in advance. You can load money onto a prepaid debit card by transferring it from a bank account or receiving payment from an employer.
Once the money is on the card, you can use it to make purchases anywhere that accepts debit cards. You can also withdraw cash from ATMs.
Prepaid debit cards vs. regular debit cards
The best type of debit card for you depends on your needs and preferences. If you don't have access to a bank account or want to control your spending, a prepaid debit card is a good option, as you can only spend the money you put on the card.
A regular debit card is a good option if you want convenient access to your money and need to make recurring payments.
You must have a bank account to use a regular debit card, but this isn't the case with a prepaid debit card.
Prepaid debit cards vs. credit cards
Prepaid cards are very different from credit cards, even though they use the same payment networks, Visa and Mastercard. When using a credit card, you borrow money from a lender and pay interest on the money borrowed. When you use a prepaid card, you are spending money that you have already loaded onto the card.
Where can you use prepaid debit cards?
Prepaid debit cards can be used anywhere that accepts this type of payment, including online, in stores, and at ATMs. However, some come with restrictions. For example, as the GoHenry prepaid debit card is for kids, restrictions are in place to help keep them safe while they learn about money. Merchants like casinos, adult entertainment venues, and alcohol and tobacco retailers are all blocked.
Related: Difference between ATM card and debit card
Are prepaid debit cards safe?
Even though UK prepaid cards are not protected by the Financial Services Compensation Scheme (FSCS), they are still safe to use. For example, all GoHenry customer funds are held by IDT Financial Services in a secured Natwest client account. More information about how your money is protected at GoHenry can be found here.
What are the benefits of using a prepaid debit card?
There are several benefits of using a prepaid debit card for kids. As a parent, it can be a convenient way to pay pocket money without worrying about finding cash. It is also a great tool for teaching financial responsibility, as kids can only spend what's loaded onto the card. With parental controls in place, you can monitor and control your child's spending, set limits and be notified about transactions.
Using a prepaid debit card can help kids learn how to budget and manage their money, which will teach them good financial habits that will help them with money management in the long term. It's also a safe and convenient way to pay for things online and in person.
Are there any disadvantages to using a prepaid debit card?
Overall, prepaid debit cards can be a safe and convenient way to pay for goods and services. However, it is important to be aware of the disadvantages of some cards so you can choose one that's right for your needs.
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Fees: Prepaid debit cards may charge various fees, such as membership fees, ATM withdrawal fees, and reload fees. Be sure to compare the costs and see what they may or may not charge before you choose a prepaid card.
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Limited features: Prepaid debit cards may have fewer features than regular debit cards. For example, some prepaid debit cards do not allow recurring payments.
How old do you need to be to get a prepaid debit card?
A typical prepaid debit card has a minimum age requirement of 6 years old.
Whether or not your child is ready to handle the responsibility of a debit card is down to the individual child. However, there are certain signs that your child is ready for a prepaid debit card. Giving your children a prepaid debit card from a young age can help them develop good financial habits that will last a lifetime. So, even though it may feel daunting initially, it's worth considering.
Do all prepaid debit cards have parental controls?
Some standard prepaid debit cards do not have parental controls.
However, the GoHenry prepaid debit card has several parental controls to help you manage your child's money. You can set spending limits, block certain transactions, and even receive notifications when your child spends. You can also freeze and unfreeze the card at any time and set up dual parenting controls so that both parents can keep track of and manage their child's spending.
How can you get a prepaid debit card for kids?
The GoHenry prepaid kids debit card is available for kids aged six and up. You can sign up for an account online and add your child as a user. Once you have activated the card, you can load money from your bank account.
Your child can then use the card to make purchases anywhere that accepts debit card payments. They can also use it to withdraw cash from ATMs. You can monitor their spending online and limit how much they can spend each day.
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