Five-year-old children are due to be issued with bank cards for the first time ever following growing demand to teach kids to manage a card account from an early age.
The move by banking giant Santander will make debit cards available to children of a much younger age than the current 11 years old usually accepted by most banks.
Santander is developing a cashless piggy bank called a Money Monster that is linked to a secure Santander account which has the child?s name on it.
Parents will be able to transfer cash to the account using an app, causing the monster?s eyes to light up, so the child knows money has gone in. The child can then tilt the toy to the side to check the balance on the account and are able to use the prepaid card under parental supervision.
As the card is prepaid it will be impossible to go overdrawn, but it is hoped that the experience will help younger children manage money in an account.
Santander?s head of innovation, Stephen Dury, said: ‘We know kids under 11 don?t have many options when it comes to current accounts and debit cards. But helping kids understand money and its value is important, and youngsters can benefit from dealing with their own money earlier in life.’
He continued: ‘We hope the Money Monsters will make tomorrow?s ?big kids? more money-savvy, as they?ll learn lessons about money earlier.’
The Money Monster is expected to cost ?30 when it is made available later in the year.
Until then parents only have the options of three main prepaid card providers, goHenry, Osper, and Nimbl. These are debit cards linked to an app, so parents can monitor spending and, if necessary, remotely disable cards.
However, these options come with ongoing costs. GoHenry users are charged ?2.99 per child per month, Osper is ?2.50 per month and Nimbl ?15 per year. Other costs include Nimbl?s 49p fee per withdrawal from UK ATMs – although the first one of each month is free.
Behaviour experts believe it is still important however for children to handle cash.
Greg Davies, of consultancy Oxford Risk, said: ‘Even for adults there?s an awful lot of evidence that the move from cash to debit and credit cards – particularly contactless – increases people?s spending and reduces savings. There?s an ?out of sight, out of mind? element to it.?