Since the onset of Covid-19, many establishments have become credit card-only and no longer take cash. With this change, getting a cash allowance for doing chores or mowing the lawn is slowly becoming a thing of the past. However, it is still possible for parents to reward their children and teach financial literacy with debit cards specifically made for children. Greenlight advertises itself as a tool to help empower parents to raise financially-smart children, if you are interested in a tool to help empower you to raise digitally-smart children, check out our GKIS Screen Safety Toolkit.
What is Greenlight?
Greenlight is a debit card and money app for families that is managed by parents or legal guardians.[1] Parents are able to load money onto their child’s card and manage where, when, and how much their child spends.[1] Greenlight was first founded in 2014 and is worth 2.3 billion dollars.[2] CEO Tim Sheehan says that through Greenlight, he is teaching children financial literacy worldwide through the tools provided in his application.[2]
According to CNET, Greenlight is one of the most popular debit card apps for kids and the best choice for kids’ debit cards out of five similar cards.[3] Greenlight accumulated 10,000 users within its first five months of operation and has more than four million accounts today.[4] The Greenlight website mentions that three out of four teens do not feel knowledgeable about their personal finance, and that they were created with the mission of changing that.[5]
Features of Greenlight Debit Cards
One of the reasons Greenlight is the most popular choice among competitors is that there are a number of features that their competitors do not have.
Greenlight has three different plans that parents can choose from, each at a different monthly rate. The least expensive plan provides debit cards for up to five children and offers an educational app, core financial tools, parental controls, a one percent savings reward, fun money skill games, credit for parents, and a “lite” version of investing for parents.[6] The next plan has investing for parents, investing for kids, a two percent saving reward, one percent cash back, greenlight black card, priority customer support, and three-times protection (identity theft, purchase, and phone protection).[6] The final plan has all the aforementioned benefits plus a five percent savings reward, family location sharing, SOS alerts, and crash detection.[6]
Greenlight provides an app for both parents and kids. It is one app but allows for two different experiences.[7] Parents are able to turn cards on or off from the app, get real-time spending notifications, instantly transfer money, and control where their kids spend their money.[7] Kids using the app are able to “Level Up”, a game that teaches kids financial literacy and allows them to learn skills from budgeting to investing.[8] The games provided are full of minigames, videos, and questions that allow for learning to occur.[8]
Benefits
Financial literacy is the ability to comprehend and use various financial skills like budgeting and investing.[9] By creating strong financial literacy skills early in life, children can learn valuable life skills that will benefit them in the future. These skills include knowing how to save for retirement, purchase a home, select insurance, create budgets, invest, buy a car, save for big expenses, use credit cards, and reduce unnecessary expenses.[10]
Financial literacy empowers children and equips them with the knowledge needed to navigate unique financial situations they will undoubtedly encounter in the future. According to a national survey, of 1203 college undergraduate participants, 46.1% of respondents have credit card debt with 27% exceeding $2000.[11] More than 79% of respondents also did not know that a credit score measures your risk to banks and can have a negative impact on future financial endeavors.[11] Through financial literacy, your children can avoid these mistakes and understand how to properly manage their funds which will allow them to avoid getting into debt at a young age.
Risks & How to Mitigate Them
As with any online financial transaction, there are always risks to placing your money in the hands of a virtual bank. However, according to the Greenlight website their debit cards are federally insured for up to $250,000 and come with Mastercard’s Zero Liability Protection.[12]
Allowing your child financial freedom can be worrisome for some parents who are unsure where their child may be spending their savings. Luckily, the parental controls in the app also allow parents to know where their child is spending their money and what they are spending it on. Communicating with your child beforehand about where they can use their money helps to avoid being caught off guard if their card gets declined for a certain purchase. We can help facilitate this healthy conversation with your child through our GKIS Connected Family Screen Agreement.
Thanks to CSUCI intern, Katherine Carroll for researching Greenlight debit cards for kids.
