Prepaid card vs debit card vs credit card. Which is the right card for my kid?

The Three Types of Cards: Credit, Debit and Prepaid.

	Credit Card	Key Card	Debit Card	Prepaid Card
Age	18+ in your own name. Generally 16+ as an additional cardholder on a parent’s account.	Varies, typically children younger than 13.	Depends on bank, generally 12-14+, but can be as young as 9.	Typically 5+.
Who owns the account	Parent.	Child, with parent as an authorised operator on the account. When the child turns 14, they can remove their parent as an authorised operator should they request.		Parent, with child as a user of the account.
How does it work?	A credit card is like a promise to pay for something later. It's a tool that can help build a good credit history, but it's important to manage it wisely to avoid debt.	A key card works with EFTPOS, which means children can withdraw money from ATMs or branches, spend in-store but cannot make online purchases.	A debit card is linked an a transactional bank account. You can only spend the money you have, making it a great way to teach kids about responsible spending.	A prepaid card works like a digital money jar. You load it with money, and kids can spend only what's available on the card, making it a great option for younger children who are learning about money management.
Parental controls	Spending on the account is visible if the child is an additional cardholder, but there are no specific parental controls. Credit cards prohibit spend on gambling.	If you are the authorised operator on your child's account, you may be able to set spend limits and see transactions. Once children turn 14, they are typically able to remove authorised operators and parental controls should they request.		If you use a pocket money app, these come with broader controls like prohibiting spend on tobacco, alcohol, gambling and other 18+ categories. Parent-set controls include spend notifications and spend limits. As the account is in the parent’s name, the child cannot remove parental controls.
Transfers in/out of the account	Transfers in are made to pay off the credit card each month.	Transfers can be made to any external bank account, as it operates as a regular bank account.		Kit allows transfers directly into the account from any external bank account, but not all providers do. Children cannot initiate transfers to any external bank account.
Fees	Depends on product – could be fee-free or have a monthly fee. Additional cash advance fees could apply if you transfer money out or withdraw money from an ATM.	Typically fee free for children.		Fees associated, however there may be additional functionality (e.g. learning).

Why Choose a Credit Card for Your Kid?

While a credit card can be a useful tool for building credit history and managing expenses, it's typically not accessible to children under 18. Adding your child as an additional card holder on a credit account requires you to have a high level of trust with your child, especially as they can spend money up to your credit limit. It's important to teach kids about responsible use of credit when they are old enough.

Why Choose a Debit Card for Your Kid?

Control and Budgeting: Like a prepaid card, a debit card helps you manage your child's spending by limiting it to the funds available in their account. This can teach them valuable budgeting skills from a young age.

Safety: While linked to a bank account, a debit card can still offer safety benefits. It doesn't allow overdrafts, so there's no risk of accumulating debt. Plus, transactions can be monitored.

Convenience: Debit cards are widely accepted, making them convenient for both online and in-store purchases. They also teach kids about responsible spending within their means.

While credit and debit cards have their benefits, a prepaid card offers a safe and practical way to introduce kids to the world of money management. That’s why we at Kit offer a prepaid card with our pocket money app.

Why choose a prepaid card for your kid?

Control and Budgeting: With a prepaid card, you can control how much money is available to your child, teaching them valuable budgeting skills and a little bit of independence from a young age.

Safety: Since prepaid cards aren't linked to a bank account, there's no risk of overdraft fees or access to sensitive banking information. The Kit prepaid card and account also includes parental controls that allow you to block merchants and set spend limits.

Convenience: Prepaid cards can be used online and in stores, offering a convenient way for kids to make purchases while learning about money management.

Choosing the right card for your kid is an important decision that can help them develop their money smarts. And with Kit by your side, teaching your kids about money has never been more fun!

Read the T&Cs, FSG, PDS and TMD at heykit.com.au/legal and consider if Kit is right for you. Issued by Hay Limited. Fees and charges may apply. Any advice given is general in nature.