Kids are becoming increasingly tech-savvy, and many parents want to teach them about finances. A debit card for smaller kids allows children to manage their money without understanding the complexities of credit cards.
In fact, some studies show that giving kids a debit card can improve their financial literacy skills.
The Greenlight debit card for children is offered by Greenlight Capital LLC, a New York City-based venture capital firm focused on investing in fintech startups.
Greenlight Capital invests in companies that provide solutions to problems facing consumers today, such as managing student loans, paying down debt, and improving access to banking products and services.
With the Greenlight card, children can spend, save and invest securely in one location. They can use the card to make purchases online and in stores, withdraw cash from ATMs, pay bills, and send and receive electronic payments.
Parents can monitor spending, view transaction history, and set up automatic payment reminders.
Parents can also use the Greenlight app to check balances, transfer funds, add funds, and track spending.
The app includes tools like budgeting templates and tips to help families keep track of expenses and stick to budgets. Let’s look at the card in a bit more detail.
The Basics
In 2014, Tim Sheehan and his wife had a problem: Their daughter was asking questions about how much things cost and why some people earned more than others.
They wanted to give her financial education early, but there wasn’t anything specifically geared toward young kids. So, they founded Greenlight, a digital financial literacy program for kids aged 2 to 12.
The Greenlight app is specially designed for kids of all ages who are ready to learn about money. Parents use the app together with their kids to teach them about budgeting, spending, saving, and investing.
Through the Greenlight app, kids learn about different types of money, such as cash, credit cards, savings accounts, and investments.
Kids earn rewards points for completing lessons and activities and can redeem them for prizes like gift cards and toys.
Parents can monitor their child’s progress and set up alerts for when their kid reaches milestones. In addition, the app allows parents to track spending and save money.
All transactions are done via the Greenlight card, a secure debit card with the Mastercard logo. The Greenlight card can be used anywhere MasterCard is accepted.
How It Works
To get started with the Greenlight card, a parent sets up a profile for their child, including a name and email address.
The Greenlight app works like most other apps. Kids open the app, tap on their profile, and select how much they want to spend or save.
Then, they can choose where to go — online shopping, restaurants, movies, etc. Once they complete their purchase, they can either take cash out of their wallet or request a refund.
How To Get It
Parents need to go to the Greenlight website and fill out an online form to get a Greenlight card. Once you do that, you’ll receive a text message containing a verification code.
Enter it into the site and follow the prompts to complete the registration process.
From there, you’ll need to provide some basic information about yourself and your children. This includes names, ages, birthdays, genders, languages spoken, and countries where they live.
If you don’t know how many people will use the card, you can add up to five additional members later.
Once you’ve filled out the required fields, you’re ready to create your child’s profile.
Here, you’ll need to select one of four different types of cards — A, B, C, or D. Each type offers different benefits, such as access to certain apps or games, discounts at participating stores, and special events.
You can choose whether each member of your family gets his or her own card or whether they share a single card. In addition, you can set the amount of money you’d like to spend per month on the card.
You’ll need to pay $10 for each extra person added to the plan if you buy multiple cards. After that, you can start adding members whenever you wish.
However, you won’t be able to change the price once you’ve selected it. So, if you purchase three cards, you’ll pay $30 in total.
After creating your family’s profile, you’ll need to verify your identity. You’ll need to upload a photo of yourself holding a passport or government ID.
You’ll also need to answer a few questions about yourself and your family.
Features
The Greenlight debit card offers parents and kids various helpful tools and features. Greenlight plans include an educational app that teaches kids about saving, earning, and spending money.
The Greenlight debit cards feature a unique design that makes it easy for kids to carry around and use.
Kids simply swipe their Greenlight debit card like any regular debit card and tap “Pay Now” to make purchases online or in stores. They can even transfer funds directly from their bank accounts.
Parents can also use the Greenlit app to turn their kids’ debit cards on and off – which means that if your kid temporarily loses their Greenlight debit card, you can turn off the debit card’s functionality until the debit card is either found or replaced.
Safety
Thankfully the card has some restrictions making it a safe option for children. First, Greenlight debit cards cannot be used to purchase items classified as “adult products,” including adult toys, adult videos, cigarettes, alcohol, and tobacco.
Second, Greenlight debit cards can’t be used to make payments to online gambling sites.
Third, Greenlight debit cards don’t work for certain types of online purchases, including wire transfers and money orders.
Pros
The Greenlight card offers many benefits for children, teens, and families. In addition to helping young people save money, Greenlight provides parents with tools to help manage their finances.
As part of the program, Greenlight gives parents real-time notifications about transactions and balances, allowing them to monitor where their kids spend their money.
Parents can also set limits on how much kids can spend and deposit and ensure they progress toward saving goals.
For example, parents could set a goal for their kids to save $100 per month and link Green Light to a bank account. If the kid makes a purchase above the limit, the parent receives a notification.
Parents can also earn reward points for shopping at certain retailers and use those points to redeem gift cards or merchandise.
And Greenlight rounds up every purchase to the nearest dollar, giving kids extra money to put towards savings.
Cons
There are a few downsides to the Greenlight card
The monthly subscription costs put some people off applying for this card, especially when other free cards are available.
The card has extra features, but you will need to upgrade to unclick these.
The card isn’t compatible with various apps such as PayPal, Apple Pay, or Venmo.
You aren’t able to add cash in the store.
Alternatives
There are plenty of options for parents looking to set up a child’s bank account online, including Greenlight, GoHenry, and Busby Kids.
But one of the biggest names in the space — FamZoo — recently announced it had raised $100 million in Series B funding and launched a new product aimed at helping families manage finances.
FamZoo offers a similar experience to Greenlight, letting parents send money to their kids’ accounts and monitor transactions.
But unlike Greenlight, FamZo does not offer investment products like Greenlight + Invest or Greenlight Max. Instead, it focuses on managing banking and family finances.
The startup says it now has over 250,000 customers across 60 countries around the world.
Final Thoughts
There are plenty of options for parents hoping to help their children learn about money management. But one of the most popular choices is the Greenlight card.
While Greenlight offers some great features, like allowing parents to set up automatic payments and track spending, it costs $5 per month.
There are other ways to provide access to a credit card account, such as having your child open a joint checking account with you.
This way, you can view transactions and make deposits into the account. If you want to teach your child about saving, you could use a prepaid debit card, which you could load with cash.
Or, you could simply let him/her keep his/her allowance every week and deposit it directly into a savings account.
In addition to learning about money management, you can also teach your child about investing. To do this, you’ll likely need to go beyond just handing over a debit card.
Instead, you might consider opening a separate bank account where your child can save his/her allowance. Then, once he/she reaches 18 years old, you can ask him/her to start contributing to a retirement fund.
You have to decide what works with your family’s needs and preferences. And remember, while Greenlight provides a lot of value, it doesn’t cover everything.
As a current Mortgage Underwriter with 15 years of experience, I have seen my fair share of money-related issues. Whether that be high levels of debt, not enough credit, or simply a lack of funds - I’ve had clients who fit into these categories.
Here I will share tips, tricks, and experiences on how you can get yourself back in control of your finances.
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