Debit Card Overdraft Protection
I am a big fan of debit cards, especially for students. High school students can have a debit card. They can't have a credit card, because they are not old enough legally to sign for a debt.
Do what you can to persuade your college-bound child not to sign up for a credit card at school. Better to fill a debit card account with $1,000 in exchange for a promise not to secure a credit card.
But there is a problem with debit cards. An overdraft charge of $30 to $40 is common when a person spends money not in his debit card account. This is a big money-maker for banks. Something in the range of 50% of all overdraft charges come from point-of-sale debit card purchases. This is over $5 billion a year.
It's annoying to get charged $40 for an overdraft of $5, but it's not a disaster for most people. But for people with poor spending habits, it is more common.
If your teenager has a debit card, warn him or her of this problem. It's wise to go to the bank that issued the card and fill out a form that tells the bank's computer to refuse to honor any transaction that exceeds the money in the account.
If the bank doesn't offer this option, either find a new bank or else monitor the money in the account. Don't assume that just because the charge is accepted you have sufficient funds in the account.