In the United States, the age of majority, or the age at which you become legally considered an adult, is 18. This is when you can also open a personal checking account with a linked debit card, which enables you to withdraw or use the funds in the account.
If you have not yet reached the age of 18, you can still get a debit card. However, to open a checking account as a minor, you will need to have a parent or guardian as a co-holder of the account. Your parents can add you as an authorized user on their existing account, or you can open a joint account together.
Some banks offer special accounts specifically designed for teenagers, while others allow you to open a standard checking account along with a parent.
However, most banks still have minimum age restrictions for joint account holders, which typically range from 13 to 17 years old.
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When is the right time to get a debit card?
Regardless of your age, you can obtain a debit card. If you are under 18, you simply need to have a parent or guardian co-sign the account with you.
However, age may not be the decisive factor when considering whether to get a debit card. Instead, there are other considerations to take into account to determine the right time for you.
Do you have a regular income?
If you have taken on a part-time job and are now earning money, it may be a good idea to open a bank account and obtain a debit card.
This is because some employers may only offer direct deposit as a means of payment, requiring you to provide your bank account information in order to receive your paychecks.
Even if your employer pays by check, having the funds deposited directly into a bank account can be more convenient and secure than carrying cash. This eliminates the need to go to the bank to cash the check, saving you time in the process.
It may not be practical to open a bank account before you have a steady source of income. Many banks have minimum deposit requirements for opening an account and may even require a minimum balance to be maintained.
Without any income, your bank account may remain inactive for long periods of time.
Additionally, some banks may close accounts with no balance or activity for a certain period, meaning that you would need to go through the process of opening a new account if this occurs.
Do you have regular expenses?
If you are currently in college or about to start, you likely have some recurring expenses for which you are responsible for paying.
In today's world, most bills are paid online, so having a bank account is likely a necessity if you have bills to pay.
Even if your recurring expenses don't necessarily have to be paid online, having a debit card can still make it easier. This eliminates the need to carry cash with you all the time, provides easy access to the funds in your account, and enables you to easily track your purchases online.
Additionally, you may be able to add your debit card to a digital wallet app on your smartphone, allowing you to leave the physical card at home and reducing the risk of losing it.
Do you have some independence from your parents?
As you grow older, you gain more independence from your parents.
Although they may still cover household bills and purchase groceries, you are likely spending more time away from them and making more decisions on your own.
This becomes even more apparent as you prepare to leave for college.
At college, your parents will not be available to make purchases for you. You will be responsible for buying groceries, fueling your car, paying for entertainment, and handling other expenses.
Even though your parents may still ultimately be responsible for the bill, you will need a debit card to pay for these items in the moment.
Do you feel you can use a debit card responsibly?
The most crucial question to ask yourself is whether you believe you can use a debit card responsibly. After all, using a plastic card for purchases is much easier than exchanging cash.
If you have a consistent source of income and expenses, a checking account and debit card are a good choice. However, if you frequently overspend and incur overdraft fees (charges from the bank for having a negative balance), then the debit card might cause more problems than it solves. Overspending can lead to excessive overdraft fees and quickly accumulate into debt if not managed properly.
When obtaining a debit card, you should take the time to monitor your spending, keep a close eye on your account balance, and create a monthly budget to stick to as much as possible.
Pros and cons of having a debit card
Even if you've assessed the questions above and feel ready to get a debit card, it's important to weigh the advantages and disadvantages before making a final decision.
• Pros
- You can’t (usually) spend more than you have
With a debit card, you typically cannot spend more than you have in your account. However, overdraft protection is usually optional and can be chosen by the account holder. If you choose not to have it, and overspend, some banks may charge you an overdraft fee. These fees can occasionally be reversed, but it is better to avoid them.
Without overdraft protection, if you attempt to make a $15 purchase but only have $10 in your account, your card will be declined, unless the bank charges overdraft fees. If overdraft protection is in place, the transaction will go through, and money will be taken from a linked account, usually a savings account, to avoid going into the negative and incurring an overdraft fee.
While these fees can be inconvenient, the limits placed on your spending can actually help you avoid accumulating a large amount of debt and develop good money management habits.
- They’re safer and more convenient than cash
Having a bulky wallet filled with cash can be dangerous. If you misplace it, you'll lose all of that money. On the other hand, if you lose your debit card, you can quickly contact your card issuer and have it cancelled, preventing anyone else from accessing your funds. The issuer will promptly send you a new card so that you can resume using it.
Furthermore, cash is becoming less and less convenient, especially with the increasing number of online transactions.
Debit cards offer an added level of security with the requirement of a PIN code for purchases and ATM withdrawals, which is not present in cash or credit cards.
- They’re cheap or free to use
Many banks impose monthly fees for checking accounts and debit cards, but these fees can be easily avoided.
Firstly, there are numerous banks and credit unions that do not impose such fees. And even among those that do, they often exempt teen and student accounts or if you fulfill certain straightforward conditions.
- They’re easy to get
The realm of finance can seem out of reach for many people. Products such as loans can be difficult to obtain if you lack financial knowledge, a good credit score, and savings.
Thankfully, debit cards are widely accessible, and many financial institutions provide checking accounts and debit cards to individuals with poor or no credit. To obtain one, all you need is some basic personal information, a few forms of identification, and, if it's a student account, proof of enrollment in school.
- They help you develop money management skills
Acquiring a personal checking account and debit card is a crucial initial step towards achieving financial independence.
By utilizing a debit card and monitoring your spending with care, you can develop effective money management skills that will prove invaluable for the rest of your life.
• Cons
- There is little fraud protection
Identity theft is a serious issue, and there is always a risk that someone could obtain your debit card or account information and use it to spend your money.
Unfortunately, using a debit card does not provide a lot of security against fraud. Even though you might eventually be reimbursed for any unauthorized purchases, you will be without your money in the meantime, which could result in overdraft fees and the inability to cover your bills. On the other hand, credit cards usually offer better security and liability protections if you lose your card or become a victim of identity theft.
Furthermore, while debit card transactions often require a personal identification number (PIN), this is not always the case if the card is processed as a credit card or for most online transactions.
- They don’t build your credit score
Your credit score is a crucial aspect of your financial wellbeing.
Having a good credit score is essential for important life events such as purchasing a home, financing a vehicle, renting an apartment, and even job opportunities in some circumstances. Unfortunately, using a debit card, unlike a credit card, will not help to improve your credit score.
- There is a potential for overdraft fees
It is beneficial that checking accounts help you manage your spending by requiring you to keep track of your expenses.
However, if you do not take the time to monitor your balance and spending, you may end up incurring overdraft fees if you exceed the amount you have in your account.
- You may have to pay ATM fees to access your cash
While a debit card can be used for a majority of your purchases, there may be instances where you need to have cash on hand.
However, if you withdraw cash from an ATM that is not associated with your bank, you will likely be charged a fee for using the ATM. If you use a bank that has limited ATM locations, you may find yourself paying more ATM fees than you would like.
- You may be subject to minimum balance fees
Many checking accounts have a minimum balance requirement. If you fall below that minimum balance, you will be charged a monthly maintenance fee for maintaining the account.
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What to look for in a debit card
With traditional banks, credit unions, and online banks, you have numerous options for checking accounts and debit cards. It can be daunting to choose from so many possibilities.
To make the right choice, you should consider what is important to you and look for a financial institution that meets your needs. Here are some factors that are worth considering:
- Absence of Fees: Many banks impose monthly fees for various reasons, including a fee for your debit card, an account fee, or a fee for maintaining a balance below a certain limit. However, many banks and credit unions do not charge these fees, so you can easily avoid them by being vigilant.
- Overdraft Coverage: Overdraft fees can quickly accumulate if you're not careful. Some financial institutions offer overdraft coverage, either as an added benefit or by linking your checking account to a savings account at the same bank or credit union. Some banks charge a fee for transferring money from your savings account to your checking account to cover any overdrafts, but it is usually lower than an overdraft fee. While it is ideal to not overdraft your account, overdraft coverage can be a useful feature to prevent costly fees. Although banks usually charge a fee for overdraft coverage, it is usually less than the typical overdraft fee.
- Mobile banking app: Most banks and credit unions offer mobile apps, making it easier to track your expenses, deposit checks, transfer money, and more. Look for mobile apps that have an intuitive user experience in them.
- Easy transfers: When choosing a bank, don’t just consider the perks of spending your money with a debit card. Pay attention to how easy it is to transfer your money to internal and external bank accounts. You might use transfers for everything from moving money to savings, paying a friend back, or receiving money from your parents.
What if I already have a debit card?
If you worked as a teenager or received spending money from your parents, you likely already have a joint checking account with a debit card.
You may be wondering what happens when you turn 18.
The good news is, if you currently have a parent or guardian on your checking account and wish to upgrade to your own account, there are several options available to you.
Initially, based on your bank's policies, you may be able to simply complete a form with your parents to have them removed from your account.
However, some banks do not allow the removal of joint account holders and, in such cases, you will need to open a new account.
When you switch to an individual account, make sure to inquire with your bank regarding account fees. Some banks exempt normal fees for teen and student accounts but may impose them when you have a standard bank account.
If your bank typically imposes fees but you have been avoiding them with a student or teen account, it may be time to look for a new bank.
Debit card vs. credit card
If you are 18 years or older and already possess a debit card, you may be pondering if it's the right time to obtain a credit card as well.
Credit cards can be a valuable tool in helping you establish a credit history and managing unexpected expenses. They also offer better fraud protection compared to most debit cards. According to the Electronic Funds Transfer Act, if you do not report the loss of your stolen debit card within 60 days and unauthorized transactions occur, your liability for the card could be unlimited.
On the other hand, the Fair Credit Billing Act sets your liability at a maximum of $50, regardless of how long it takes to report the loss. Hence, losing a credit card carries much lower risks.
However, credit cards can also be dangerous as it's easy to overspend. While you're no longer confined by your bank balance, you may have a credit limit that is higher than what you require.
Many people, when they sign up for their first credit card, mistakenly view it as free money and end up spending more than they can repay. This can have a significant negative impact on their finances in the long run.
Here are a few key differences between credit and debit cards to consider:
Bottom Line
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In conclusion, to open an individual checking account and obtain a debit card, you must be 18 years or older. This is when you reach adulthood and become responsible for your finances.
Fortunately, there are alternatives for getting a debit card before the age of 18. Parents can usually open joint checking accounts with their children starting at the age of 13.
As more and more people recognize the significance of educating children about finances at an early age, the options for even younger children are expanding.
In conclusion, obtaining a debit card is a crucial step towards managing your finances as an adult. However, it is important to be aware of its potential risks and take necessary measures to ensure the safety of your money.
Read More: How to Get a Loan with Bad Credit
Source: https://www.mos.com
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