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Worried about giving your children financial freedom? Jill Papworth looks at the controls banks place on their spending
The pros and cons of young people having debit cards, so they can make online purchases without having to hassle their parents to do it, is high on the agenda in my house. My 15-year-old son is not unusual in wanting to spend some of his modest monthly allowance online, either renewing his subscription to World of Warcraft (thank your lucky stars if you don't know what I'm on about) or buying DVDs, games or books.
This involves his father or I paying on one of our cards and getting the money back from him to pay the bill. We would all find it useful if he had the independence to do this for himself, subject to parental supervision.
Knowing that several of his friends have debit cards linked to their youth accounts, but discovering Nationwide – where my son keeps his allowance in a Smart account – does not offer debit cards to under-18s, I set out to find out what was available elsewhere and how much control parents could retain.
Parents need to be aware of the potential dangers of giving youngsters access to debit cards. One concern is that youngsters will use a card to overspend and run up debts. Another is that they will buy unsuitable products online.
Last June, Money ran the story of 15-year-old Ben Jenkins (not his real name) from Wales, who had been sent a Visa debit card by Lloyds TSB without his parents' knowledge. This should not happen now, incidentally, since the bank insists customers under 16 can only open an account and opt for a debit card in the presence of a parent or guardian. Ben managed to use the card to buy cigarettes, Viagra and a fake ID card over the internet, much to his parents' horror.
Where can youngsters get debit cards?
Most big banks offer youth accounts for 11 to 18-year-olds with an optional basic debit card.
The point about these is that they only allow people to pay for goods and services if there is enough money in their account. Each transaction has to be authorised electronically by the issuer. If the money isn't there, the transaction is stopped.
Cards in this category include Visa Electron, issued by Abbey and Halifax, Visa Connect from Barclays, and Maestro Solo, issued by NatWest. Banks can also provide standard Visa debit cards with these tighter approval controls, as is the case with Lloyds TSB and HSBC youth account cards.
Lloyds TSB says its card controls stop young users going overdrawn and prevent attempted transactions on gambling and adult content websites, where identifiable.
The downside of these cards is that some outlets and websites are unable to comply with the requirement for *online authorisation and will not accept them. Odeon.co.uk, for example, does not accept Electron or Solo for ticket bookings. But acceptance of these cards is growing, and many sites popular with youngsters – such as worldofwarcraft.com (hurrah!) and Amazon.co.uk – do take them.
Do parents have a say in when their children can get a debit card?
Youngsters can normally get a card from the age of 11 (13 at HSBC). But cards are generally not issued to anyone under 16 without the permission of a parent or guardian. Abbey does not issue cards to customers under 16.
Barclays says that 11 to 15-year-olds "must not only have their parent or guardian's permission, but the adult must be present in the branch to sign for the child to have a card".
HSBC does things differently. When a youngster reaches 13, it writes to the parents telling them it will shortly be sending a debit card to the child, and giving them the chance to opt out in writing or in person.
Halifax is the exception in saying that parental permission is not mandatory and that, technically, an 11-year-old could open an account and get a card without their parents knowing.
But a spokeswoman says: "If a child or young adult does open an account with us, they are likely to be challenged, and a parent or guardian asked to be present.
"Invariably this will be a necessity anyway, as most of the documentation we accept for address verification would have to come from their parent or guardian."
Most UK banks make 16 the cut-off point, after which a young person can get a card without parental permission. However, Visa says: "In terms of parental permission, this is recommended as best practice for banks for people under 18. It is important that parents know their children have a debit card and the risks that come with that."
Do parents have other ways of *overseeing their child's account and spending?
Until the child turns 16, yes. Most banks will supply details of a child's *account to concerned parents on *request up until the age of 16, though few go as far as providing an automatic option for statements to be sent "care of" the parent, so they can see what their children are buying, as recommended by Visa.
Once a child is 16, most banks treat their affairs as private and won't *divulge details to parents.
HSBC is alone in saying that it can disclose information about a young person's account if the parent requests this in writing or in person until the child turns 18.
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