My son is going away to college in August and I am considering options to give him spending money. One option is to make him authorized user on one of my credit cards. I don’t necessarily trust him to reign in his spending. Another is to give him a debit card that doesn’t have lots of fees, so he can use it to take cash from ATMs, pay for things in stores, etc. What are you parents doing? Any recommendations for low cost debit cards?
Thanks.
My kids have had their own bank accounts and debit cards since they started working summers in early high school. I’m an authorized user on the accounts (had to be since they were less than 18), and have the online login - just to be safe. I’ve known too many families where kids went way in the whole with overdraft protection before the parents knew - but mine have never done that. They opened accounts at the credit union where I manage all my finances.
When D went off to school, she changed her account to Bank of America as it is the primary bank on campus and offers free accounts to students. I’ve set my account up so I can transfer money to her anytime she needs.And I still have the login just in case - like when she lost her debit card in a train station - I was able to call and cancel it for her since I was on the account.
Schools also often have their own cards that parents can pre-load that can be used on-campus and at many nearby off-campus locations.Some will also convert these to pre-paid credit cards.
When D went abroad I added her to my American Express. She will be getting her own credit card this year so she can start establishing credit independently. S is already asking about getting a credit card as soon as he gets a part-time job in college, understanding that he shouldn’t charge anything he couldn’t afford to pay cash for. His economics class in high school covered personal finance and he is interested in establishing a good credit score as soon as possible.
At some point young adults need to learn how to manage money. Better to start now than leave them lost when they move out on their own.
If he has a spending problem do not make him an authorized user on one of your credit cards. That worked well with my fiscally responsible S, but was a disaster with my shopaholic D. The debit card has worked better for D. Her spending money (which she earns over the summer) is placed into a savings account and then I transfer money to her checking each week. I have an overdraft set up from her savings and monitor her checking pretty closely. There is no cost for the debit card itself. Just be sure to set up the account with a bank that has a branch or ATM on campus to avoid ATM fees. There are also some institutions (USAA) that waive/refund ATM fees up to a certain number of transactions or amounts.
It can be useful in some instances for your child to have a credit card too. If you go that route, consider a prepaid card, or a student card (associated with your account but you can set a lower limit than on your card.)
We bank with Fidelity. Each of kids has a checking account set up their with me as a joint account older. They use the account for their summer earnings, school year earnings, and I transfer from my account to theirs money for books, food (one is off the dining plan), a little spending money. The account is totally free, it earns a very teensy bit of interest, it comes with a totally free debit/ATM Visa card. For the card, they can take out money at any ATM in the world and ATM funds will be reimbursed back into their account. (in one country the ATM fee was $8.50 and it was still reimbursed.
I like having joint with them now as it allows me to handle any transactions for them and monitor and discuss spending/saving habits with them before they transition to being on their own financially post college. They have also set up Roth IRAs with some of their earnings so they have it all under one roof. In addition to Fidelity, Vanguard would be a similar company I’d recommend.
Schwab offers free refund of any ATM fees if you have their ATM/debit card. S has found that useful. We all have accounts there but also opened a joint account at the credit union on campus. I have a MMkt acct and they each have savings/checking accts.
My son had his own credit card, debit card, checking account and saving account (not much money in the saving account.)
He is frugal (occasionally more frugal than us.) So we have no concern that he will use money frivolously. But he is not very much into personal finance so he usually does not know how much he has in any of those accounts. The helicopter parents on this end handle it in order to make sure that he has money to use when he needs it. Glad that recently he finally seems to start to pay attention to the personal finance matters – maybe thanks to his student loans, which we would not want to handle it after he graduates.
If he is bad with spending…why would you give him a debit or credit card.
Let him get an on campus job, set up his own bank account, and deal with this himself.
When he goes for orientation there will be banks there offering him student accounts. He can open one of those for his earnings.
I agree that campuses tend to have credit unions or banks convenient to their campuses. Are there steps you and your child are now taking to help him get a better handle on personal finances before he goes off to college?
S and D are both users on one of our credit cards. They both have savings/checking accounts at the same bank that we do and we can deposit money to their accounts if we need to. They are both responsible and have not gotten into trouble with this plan. I would hate to have to manage their spending if they were not.
He has his own account at a credit union. I don’t have an account with them. I wonder if there is a way I can transfer money to his account periodically.
I am not going to ask him to work on campus. He likely can’t handle that and school work as Premed student. I am OK with giving him reasonable allowance every month for small things.
I shall check with school about bank on site.
Thanks.
S was given a nice 4-figure lump sum from his aunt, plus money from graduation, Eagle Scout congrats and birthday gifts over the years, plus earnings. He used that for his expenses. We covered room, board, books and plane fares.
For D, we would send her periodic care packages and gave her a lump sum each semester equal to the lowest cost meal plan, plus plane fares. She had to use earnings and gifts to cover the rest.
For both kids, whenever we visited them at their U, we’d take them to Costco and let them fill the cart. We’d also take them wherever else they wanted and generally pay, plus take them out for a meal or more, with any friends/room mates.
Both kids were able to make the lump sums last. It was easier for me to just disburse lump sums rather than more frequently.
@HFAparent , there’s an app for that. 
60 minutes did a segment tonight on the explosion of “FinTech” (financial tech) companies that are making it easier and more efficient to pay and transfer money. The main company discussed was Stripe, started by two 20-something brothers who went to MIT and Harvard and dropped out to start it, and it’s now worth $5 billion. Another company mentioned that I’m familiar with was Venmo.
Venmo is a popular app where you link any bank account to Venmo, add “friends” like on Facebook, and send money to a friend just by opening up the app, typing in the amount and clicking Send. The friend then opens his app, sees the balance there and clicks a button to transfer the money directly into his/her linked bank account. There are no fees and the money shows up in the account within 48 hours, but usually 24 from my experience.
The beauty of it for you is that you can send any amount you want to his credit union account at any time via Venmo with a couple of clicks. If he’s blown through what you’ve sent too soon, you can just send $25 to cover some specific expense. No need to go to the bank, send checks, try to figure out how much to send for how long, or have accounts at the same bank so you can easily transfer money on line from one account to another. All he needs is a debit card linked to his account, which the bank or credit union usually provides for free.
Where I live, people use it all the time to pay people for whatever, especially at dinners where one person pays and the others transfer their share to the payer using Venmo before they’ve left the table. The first time someone said they’d “Venmo me,” I didn’t know what they were talking about, but we’re becoming a cashless, checkless society and I decided I needed to get with the times. I also understand students use it to pay their share of rent or bills to roommates.
Hope that helps. It may sound complex, but like Uber, you realize how easy it is the first time you use it.
Transferring money between banks is pretty easy these days with ACH and online banking. Venmo is popular among younger people but its pretty easy without it anyway.
Does Venmon require the user to install an application on the smartphone? If yes, it would be a no-go for my wife. She always thinks that since she knows so little about the security of a smartphone and also she might lose the smartphone accidentally, she does not want to use the smartphone to do the banking. She also believes wifi or any data being sent over the air is not safe enough for such use.
I myself trust the banking software (more “traditional” the better) than any software coming from a consumer product company (including ALL smartphone vendors – if you know how quickly they release one version of application software to the next version just in order to fatten the wallet of the “shareholders” (and how much, or little, the developers actually know the software they develop) and how many potential bugs they tend to have in their initial period (which could be months!) of most software releases, I believe you should have some concern too. But you can claim I am too paranoid also.)
You can say she is more paranoid than most people are. (Another example: Getting on the air plane makes her nervous also. She once said she wishes we could eventually live in a city from which we could travel to visit our son by train or bus. Aarrrrggg!)
I can relate to your wife’s thinking, @mcat2. The less connections to my financial accounts the better. There are plenty of hacking instances out there.
One of my previous coworkers, who is much better about the computer and networking than I am, set up a separate and very secured computer whose only purpose is to do the online banking. When he does not do the banking on that computer, he turns that computer completely off. He uses another computer for all other purposes. He does not trust the “new kid on the block” gadget like mobile phone very much, just because he said he only knows how to make a computer secure but he does not know how to make a smartphone secure. (He believes a smartphone could be made secure (especially when/if its release cycles will not be so often) but he has not had time to learn how to do it yet.)
My bookkeeper for my nonprofit has only one computer that she isolates that she uses for emails and any contacts with the outside world. The rest of her files and things are wholly within her office and not connected to that computer. She feels more secure that way. I admit I’m still a dinosaur and still use checks. Have never had problems getting folks to accept my checks or credit cards. 
@mcat2 yes, it’s an app you install on a smartphone. I understand your wife’s concern and it’s not without merit. There are risks in using the Internet to pay or transfer money whether it’s on a computer, tablet or smartphone. You can minimize the risk in various ways, but you can’t eliminate it completely unless you don’t use the the Internet at all.
As we move more and more toward as cashless society with apps like Venmo, Uber, Apple Pay and others, security is going to become even more crucial. I feel fairly safe with my phone because the average person who find or steals a phone isn’t a hacker and won’t be able to access the apps without my security code or fingerprint, and I can always wipe the phone remotely, but there’s still an inherent risk involved. At the same time, I’m trying not to be left behind, and the convenience lures me in. So far, no problems, but I monitor everything closely.
I take care of most of my parents’ finances now, but they live several hundred miles away so I pay their bills on line. I found a credit card charge recently by some on line company that sent my father something he never ordered. No idea how they got his number. He has never even used an ATM. No way he’d know how to order anything on line. so I put a fraud watch on the account.
Each kid had a debit card, and we put in so much each week…of their own money. One is a spendthrift and he would have gone through his in a nanosecond. The other is not. After we continued to keep putting in his money weekly it just kept adding up so we stopped at A certain point.
We just didn’t want them spending their discretionary money and then we were left paying for what should have lasted them all year.
We bank with USAA. We had a joint account with the kids so we could keep an eye on things if we needed to. USAA provided a student credit card with a low limit that got higher as they got older. The younger one also used the campus money system for paying for laundry and printouts and probably some snacks. The older son made enough money during the summers he didn’t need to work during the school year. The younger son made less, but still seemed to manage of a very meager allowance from us. And his senior year he kept working for the place he’d been working the previous summers.