You can open a bank account before turning 18, and it’s a good idea to do so. A teen checking account gives teens the opportunity to learn more about money at a young age. Teaching them about concepts like saving money, building toward financial goals, and paying off bills can have a positive impact on their financial future. This guide will explore how to open a teen checking account, features to keep, and other key details to consider.
Can Teens Get a Checking Account?
Teens can get checking accounts, but any teen who is under 18 years old must be accompanied by a parent or legal guardian. The adult acts as a custodian who watches over the teen’s account. Some teen accounts allow the parents to monitor the account, set parental controls, and provide allowance money.
The Importance of Teaching Financial Responsibility
Having a teen learn about financial responsibility can help them develop good financial habits early in their lives. It’s better to learn these lessons when a teen only makes a few dollars here and there compared to learning lessons and making mistakes with entire paychecks. Teaching discipline at a young age can also help a teen reach their financial goals sooner when they become adults.
What is a Teen Checking Account and How Do They Work?
A teen checking account is similar to a regular checking account. However, these accounts have fewer features and almost zero fees. Almost every bank waives monthly maintenance fees on teen accounts. The idea is to give teens an easy way to get started with banking in the hopes that they become lifelong customers. Many teen checking accounts also come with debit cards that allow teens to make purchases using their checking account balances.
What are the Benefits of a Teen Checking Account?
Helping your teen open a checking account at a financial institution presents numerous advantages. These are some of the perks that stand out for kids who get started early.
Financial Literacy Skills
Financial literacy can help teens and adults make better decisions with their money. They can become more resistant to impulsive buying and focus on saving money instead. A teen checking account can introduce financial literacy before a teen gets a full-time job.
Real-World Money Management
Teenagers get to make decisions about how they manage their money. If a teen receives a $20 allowance each week, that teen can choose to buy something right away or save up for a larger purchase. The teen can also opt to invest the cash instead of spending it. The teen will also learn the consequences of spending vs. saving money.
Building Responsible Spending Habits
A checking account can help your teen develop better spending habits. They’ll have a better understanding of how much effort it takes to obtain money and how to allocate it across multiple expenses and financial goals.
Establishing Early Credit History
A checking account alone won’t lead to credit. However, it can put your teen on the right path to building credit and being prepared to pay credit card bills on time.
Common Features of a Teen Checking Account
Banks offer several perks for their teen checking accounts. These are some of the features to keep in mind.
Joint Ownership with Parent or Guardian
Most banks require that a teen checking account has joint ownership between a teen and a parent or guardian. A teen who is under 18 years old cannot open a bank account without a parent’s permission.
Age Requirements
Some teen checking accounts are only available for people between the ages of 13 and 17. Other teen checking accounts remain open through the account holder’s college enrollment.
No Monthly Fees
Most teen checking accounts do not have any monthly fees. These fees will only apply once the teen ages out. At that point, the teen checking account converts into a regular checking account.
Online and Mobile Banking Access
Make sure a teen checking account is easy to access on any device. The bank should also have a mobile app.
Debit Card Access
It’s also common for teen checking accounts to include debit cards. However, these cards have limits on how much you can transact each day, and parents can use parental controls to block certain merchants.
Parental Controls and Monitoring
This feature allows parents to set up some guardrails during their teen’s banking experience. Regularly seeing how your teen uses money can make it easier to teach your child how to effectively manage their money.
How to Choose the Right Teen Checking Account
You can choose from several teen checking accounts. Here’s how to choose the right one for your teen.
Comparing Different Banks and Credit Unions
You shouldn’t rush for the first teen checking account you find. Comparing several bank accounts will help you gauge which ones offer the better features and perks.
Understanding Fees and Charges
Fewer fees make for a more pleasant experience. While checking accounts should generally have few fees, teen checking accounts should have even fewer fees. For instance, you shouldn’t have to pay a monthly maintenance fee for a teen checking account.
Analyzing Minimum Balance Requirements
Some teen checking accounts require a small minimum deposit and that you maintain a minimum balance to avoid a monthly fee. However, many teen accounts do not have those requirements. You can get started even if you don’t put any money into the account.
Reviewing Account Accessibility and Convenience
A teen checking account should be easy to access on any device. If the interface looks too complex, you should consider another teen checking account.
Assessing Customer Service and Support
Online reviews will give you an idea of whether a bank has good customer service or not. You should also see when customer support is available and how you can get in touch with them.
Opening a Teen Checking Account
Ready to open a teen checking account for your teen? Here’s what you can expect during the process.
Required Documentation
You will need your ID, Social Security number, and address to open an account. A teen will need a co-signer or account holder who is 18 years or older to open an account.
The Application Process
The application process is straightforward. You will have to provide the necessary documents and then enter your name and email address. A bank will request some additional details during the application process, but it should only take a few minutes.
Initial Deposits and Funding of the Account
Some teen checking accounts require that you make an initial deposit, while you can get away with not making an initial deposit for other accounts.
Setting Up Direct Deposits
If your teen is working with an employer, the next step is to contact the employer about the new account. Direct deposit streamlines payments and can help you access your money sooner.
Tips for Managing a Teen Checking Account
Managing a teen checking accounts can give your teen a head start with their finances. These tips can make it a productive experience for teens and their parents.
Setting Financial Goals
Working with your teen to establish financial goals can give you both something to work toward. Some banks make it easier to set financial goals with teen checking accounts. They allow teens to monitor their progress toward objectives.
Learning to Save and Budget
Giving your teen $20 and letting them decide how to use it will give them a good mix of autonomy and decision-making. Some teens may know how to use the $20 right away, while others may want to grow their accounts before spending money. Some teens may opt to invest in it instead.
Utilizing Online and Mobile Banking
Online and mobile banking make teen checking accounts more accessible. You should only use a bank that offers a good online experience.
Parental Guidance and Involvement
Parents should step in and offer some guidance along the way. They can talk about how they have used money in the past and talk about their mistakes. Parents can act as mentors, but teens ultimately decide how they want to use the funds.
Monitoring Account Activity and Transactions
Parents can review financial transactions from their teens’ accounts to offer suggestions and ensure everything is going smoothly. It’s a good idea to monitor an account at least once per week.
Setting Spending Limits and Handling Overdrafts
Spending limits can help your teen learn the importance of saving money and investing. It can also keep them out of trouble with overdrafts. Parents can fund accounts to get their teens out of overdrafts but set additional parental controls to ensure it doesn’t happen in the future.
Conclusion: Encouraging Financial Responsibility with a Teen Checking Account
A teen checking account helps teens learn how to use money and gives them a deeper understanding of its value. Money is more than just a means to buy goods and services. Accumulating enough of it can lead to financial independence before reaching retirement age and give you more choices in the future. Teaching these money lessons and others to a teen can have a significant impact on their lives.
