A debit card is linked directly to your savings account. You can use it at any Visa or Mastercard merchant, but you do not borrow from the bank. Instead the money is deducted from the funds you actually have in your savings account (like when you use your ATM card). So no interest is charged.
If your kid starts bugging you for a supplementary card, consider getting him to apply for a debit card instead. If he needs to travel overseas without you, you can then top up his savings account with extra money to make sure he doesn't run short of cash while he's still overseas.
Business Times - 18 Jul 2006Another question occurs to me. Suppose I do not qualify for a credit card but my Daddy does. He could apply for a supplementary card for me and claim that I intend to travel overseas. How could the bank know whether this is true or not?
Credit card privileges for teens in the pipeline
Changes follow amendments made to Banking Act
By LESLIE YEE
(SINGAPORE) Teenagers as young as 18 may soon fuel the next phase of credit card growth.
Banks are now issuing supplementary credit cards to those aged 18 and over - down from the previous minimum age of 21.
Also, banks are now issuing supplementary cards to persons regardless of age for purposes of overseas travel and not just overseas study. Users of supplementary cards can spend, with the bills going to the main account-holder.
In line with recently revised regulations by the Monetary Authority of Singapore (MAS), banks have made changes to guidelines on issuing cards and they are looking forward to good demand for supplementary cards from this new group of users. The revised guidelines allow banks to reach out to a previously untapped customer base.
An MAS spokesman told BT: 'MAS recognises that credit cards are used increasingly as a means of payment, particularly when travelling overseas. As part of our ongoing review of regulations, we amended the rules on supplementary credit card issuance to allow these cards to be issued to individuals aged 18 years and above, or for the purposes of overseas travel.
'The aggregate amount of credit granted to the principal and supplementary cardholders remains capped at twice the principal cardholder's monthly income.' Banks will be careful when it comes to issuing supplementary credit cards to young people and they want young customers to be prudent in the use of their credit cards.
For those below 18, 'cards will be issued strictly based on needs', said a spokeswoman for DBS Bank, adding: 'We will be reviewing each application on a case-by-case basis.'
Having obtained the card, I could then proceed to use it in Singapore (or for that matter, overseas). I doubt if the banks are required to, or have the technological capability, to issue credit cards that cannot be used in Singapore but can be used overseas. And do you think that banks would really cancel your credit card if they check and find out later that you mostly use it in Singapore and had never, or had only occasionally, travelled out of Singapore? Possible, but I doubt it.
Effectively there may be a loophole here whereby people who don't earn enough to qualify for a credit card under Singapore's rules will still be able to get a credit card just by claiming (whether honestly or otherwise) that they need it for the purpose of travelling overseas. All they need is a parent or spouse (or possibly a boyfriend or girlfriend or best friend) to collude with them in that relatively simple lie.