Should I give my child a debit card?

It can be a useful teaching tool for children to learn about money management. But parental guidance is key.

- Chuin Ting Weber

Financial institutions have increasingly introduced new products that put cashless payments into young hands.

POSB's Smart Buddy programme, which allows children to pay with a wearable smartwatch or card linked to a parent's account, was launched in 2017. In 2022, the Ministry of Education said it would be extended to all primary and secondary schools, junior colleges and Millennia Institute by 2025.

There have been more innovations recently.

In September, OCBC created a stir when it announced a debit card for children as young as seven years old. While the card is tied to a bank account that has to be opened by parents, the account is registered solely under the child's name.

In November, fintech company Revolut started distributing its debit cards via vending machines in the National University of Singapore. Revolut Singapore's chief executive officer Raymond Ng had said that students below the age of 21 are often underserved by traditional financial institutions.

He added that the vending machine at NUS is also a way to make money management more accessible to students and boost financial literacy.

This move towards making payment products accessible to young people is in part driven by necessity. Singapore is moving towards cashless payments, even in school canteens and bookshops. But what is interesting is the suggestion that using debit cards can help young people improve budgeting and money management. Is this really the case?

THE DEBIT CARD ITSELF DOES NOT TEACH

The Programme for International Student Assessment (Pisa) under the Organisation for Economic Cooperation and Development (OECD) has some insights.

Singaporeans will be familiar with Pisa as an international benchmark for education, with local teenagers consistently topping many subjects. What is lesser known is Pisa's optional test on financial literacy, as Singapore has not participated in it.