Living Life the Wong Way --In Pursuit of Happiness and Food!

Debit Card or Credit Card for Your Teen?

Credit Card or Debit Card?

Are you currently contemplating between adding a teen to your credit card as an authorized user or opening a checking account for them? I was in the same situation about a year ago.

My eldest daughter started bugging me about getting her a debit card when she was in her junior year of high school. Since most of her friends already have debit cards, she wanted one too.

My good friend chose to add her daughter as an authorized user on her American Express credit card. She sets a spending limit and is notified of all her teen’s purchases. Her daughter then reimburses her mom for the purchases from her bank account.

Debit Card for Now

My daughter has already had her part-time job for about a year, so I felt it was time for her to have more responsibility with managing her own money. I researched the credit card and debit card options and ultimately decided on the debit card option. Since she was only 16 at the time, I wasn’t quite ready for her to have free reign to our credit cards.

I liked the idea of her having a checking account instead because she’ll learn to spend within her means and it creates a more clear cut account of what money belongs to her rather than having her reimbursing us for her purchases each time.

After some research, I signed her up for a Capital One Teen Checking Checking Account. It seemed like the logical choice since it was:


-No Minimum

-Free Debit Card 

-Mobile App 

-Free Capital One ATMs

I can easily transfer money to her account. I also like having the option to be notified of her purchases.

While doing my research, I was surprised that some financial institutions that offer teen accounts wanted a monthly fee of $4.99. I’m not sure why anyone would choose to pay a monthly fee for such a service when there are free options. I’d rather give that monthly fee to my daughter instead.

The Capital One Teen Checking Account has worked well for us. Check them out if you’re considering the debit card option.

What We’re Doing

From each of her bi-weekly paychecks, I transfer over $20 to her checking account and the rest goes to fund her Roth IRA. If she ever goes over the yearly limit, then, it’ll go into a 529 account.

If your teen has earned income, check out my post about opening a Roth IRA for your teen minor.  They will get the best of both worlds—low to no taxes on their earnings now and no taxes when they make withdrawals from their Roth IRA.    

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