Invisible Money: Credit and Debit Cards
Undoubtedly, your children have seen you use a credit or debit card when you shop and wanted to know about them. Explaining the difference between credit and debit cards and their function will take some time, as well as a few tools to illustrate their use.
Probably the best way to explain what each card is for is to demonstrate by using visual tools. For example, take out a debit card and a credit card. Use a label or scotch tape a piece of paper to each one identifying what they are.
Now you can effectively show your children what they are used for. Make a game of it. Place a few grocery items on the kitchen table. Pretend that you are buying them and paying for them with a debit card. Explain the process to the children in ways they can understand. Repeat the same process with a credit card.
Show the children a credit card bill. If the grocery amount is on the bill, they can easily connect your grocery demonstration and the charge on the bill.
Most likely the children will have many questions for you. Answer as best you can in words they understand.
More importantly, however, is to illustrate to the children what can happen if you use the credit card too often. Use the family budget as a way to teach them that you have set aside so much money to pay for the credit card bill each month. Then show them what would happen if you overcharged; that you wouldn’t have the money in the budget to pay the monthly bill.
You may have to repeat the demonstration a few times before the children truly grasp the significance of what you are trying to relay to them. Eventually, they will come to understand and will probably ask, “Why don’t you just buy things with money?”
That’s a good question and one that will take time and a considerable amount of self-examination to fully explain to their satisfaction.
While experts suggest that you really do not have to explain what credit cards are used for and why, they do recommend that at some point you have to have a discussion about financial responsibility.
This is particularly true when the child becomes a teen and asks for their own credit card. There has been a great deal of discussion as to whether or not teens should be given a credit card at all. Whether you are a proponent of such an idea, early education on the disadvantages of owning a credit card will likely be a topic your family will discuss in the near future.