More and more parents are ordering “Just-In-Time” spending cards for their kids.
What are those? Prepaid cards used only at the moment of purchase.
Here’s how it works.
Normally, the balance on the Just-In-Time card sits at zero. Earnings from a kid’s chores, odd jobs, allowance, or part-time work accumulate in a separate short-term savings bucket. That savings card or account is never used for purchases directly.
When the child wants to make a purchase, she:
- Checks the balance of her savings to ensure sufficient funds.
- Requests an immediate transfer from her savings to her Just-In-Time card for the required amount.
- Waits for her parent to approve and complete the transfer.
- Makes the purchase using the freshly loaded Just-In-Time card.
Once notified of the purchase, the parent can return any remaining funds to savings and bring the Just-In-Time card balance back down to zero.
Sound like too many steps?
With the latest app-driven card offerings, the cycle can be competed in real time with just a few taps on a smartphone. More often than not, requests from my kids are sent, received, and approved (or not!) while waiting in line at the register.
Why bother with the Just-In-Time card two-step at all? Four solid reasons:
- Reduce impulse buys. Now your child will have to stop, consider, and justify each purchase. He can’t just swipe a loaded card willy-nilly on a whim.
- Increase dialog. No more silent purchases. A little discussion (often minimal) will accompany every purchase. More money discussions means more money skills. It also means more comfort with financial transparency — your child’s future spouse or partner will appreciate that. And, as Ron Lieber says: “Every conversation about money is also about values.” Bonus.
- Increase earnings on savings. Your kid’s money will spend most of it’s time in savings. If you’re offering a healthy parent-paid interest on his account, the funds can grow nicely. Further incentive not to spend.
- Thwart fraudsters. Chipotle, Target, the local restaurant, the gas station down the street, that weird gaming site: they’re all places your kid might use his card. What else do they have in common? They’ve coughed up payment card data to fraudsters.
The chances keep increasing that any card your kid uses will be compromised and have its data sold off on the dark web. Down the line, someone somewhere will probably use that stolen data to hit your kid’s card with a fraudulent transaction.
Fortunately, his Just-In-Time card has zero dollars on it. That fraudulent transaction will be declined. You’ll see the alert. You’ll order a replacement card without hassling over lost funds. Easy-peasy.
Meanwhile, your kid’s savings card hasn’t been used anywhere, so its funds are safe.
With a Just-In-Time card, moving money at the very last moment will help your kid hold onto money over the long haul.
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