How can I instil financial discipline in my college going son who has a credit and debit card.
Ideally, you should introduce credit cards only after your children are comfortable with debit cards
How can I instil financial discipline in my college going son who has a credit and debit card.
Devesh Soni, Gurgaon
College can be a tricky phase in one’s life – one tends to meet and spend time with friends, without realising the true value of money. If you want to introduce some discipline, start with the debit card, which is linked to the bank account of your son where his pocket money is transferred. Although this account earns just 4 per cent interest per annum, it will help your son understand banking products. You could also instruct the bank to limit the single day withdrawal or transaction on the card – many of them allow such limit setting. Debit cards and savings bank accounts instil discipline in kids regarding use of debit cards and also make them aware of the banking system early in their lives.
Ideally, you should introduce credit cards only after your children are comfortable with debit cards. Make sure you clearly explain to them how credit works and the pros and cons of using a credit card. If you feel that your kids can handle a credit card, give them dependent cards with your card being the primary one. So, whenever they use their cards, you will know about it as the bill will come to you. You can set limits wherein transactions above a certain amount have to be authorised. The maximum credit limit facility is also a useful tool of control.