It is important to teach your teen the importance of having their own bank account. It will help them build money saving skills and teach them management of their own account.
Read more to learn how you can find the perfect bank for your teen.
Tip #1: Know the Rules for Opening an Account
Not all banks offer accounts to teens and those that do may have specific guidelines regarding who can open an account. Some banks limit eligibility to teens over a certain age. Others may require one or both parents to act as co-signers on the account or be current bank customers if the teen is under 18. This serves as protection for the bank if your teen overdraws from their account.
Parents also need to consider the financial requirements for opening and maintaining a teen account. Depending on the bank, your teen may be able to set up a checking or savings account with as little as $1. You should also look at whether there are any balance requirements for the type of account you’re planning to open.
Tip #2: Review Each Account’s Fees
Fees can easily consume your teen’s balance if they’re not careful so it helps to know what kinds of things the bank may charge. While minors won’t be charged overdraft fees, they could still be subject to minimum balance fees, check fees, debit card fees, statement fees and monthly maintenance fees. Ideally, you should look for a bank that charges as few fees as possible to help keep costs down.
If you’re planning on getting your teen a debit or ATM card that’s linked to your account you should make sure they’re aware of what the cost is for using it. While they won’t be charged a fee for making withdrawals at their bank, they could get as much as $5 to $10 in fees for using a foreign ATM.
Tip #3: Assess the Perks the Bank Offers
Many banks offer a variety of free services to their customers and you’ll want to find out if any of these perks are offered for teen accounts. Things like online bill pay, text alerts and mobile banking services can help make it easier for your child to keep up with their cash any time and any where.
Some banks also offer free financial education resources and budgeting tools for teens which can help them get prepared for managing their own money. While it may be more difficult to find, you should also check to see whether any banks in your area offer interest-bearing checking accounts for teens. The rate may be low but every penny counts and it can add up over time.
Tip #4: Look for Any Extra Incentives
Some banks may offer special incentives just for teens to encourage them to practice good financial and educational habits. For example, certain banks offer a program that rewards students for doing well in school. Your teen just has to show the bank a copy of their report card and the bonus money will be automatically deposited into their account.
If you have an older teen, you may want to look for a bank that specializes in offering car loans for young adults. These programs are designed to make it easier for teens with little or no credit history to qualify for a loan at a reasonable interest rate. Depending on the bank, your child may have to take a financial education course as part of the application process but it’s a good opportunity for them to learn about the responsibility of borrowing money.
Banking is an important thing for teens to learn and understand the basics of. It helps with money management and will prove useful to learn earlier than later.
For more information on banking, check out more bank guides right here on HMB!