Bank accounts for teens: Help yours manage a checking account
First-hand experience with a banking account is a great way for a teen to learn financial responsibility. Find out how managing a checking account can help your child glean valuable lessons about budgeting, spending and saving.
Opening a checking account is an important first step in helping your teen establish a financial life. It’s a great opportunity for you to talk to them about managing their spending and setting savings goals. When you think your teen is ready—it may be when they get their first job, when they start driving and need to buy gas or just when you feel they are mature enough—
[Visual of: A debit card being used at a gas pump]
keep these few things in mind as you choose the right account and teach him how to use it responsibly.
At most banks, you can open a teen checking account when your child is 13. One parent is usually required to be a joint owner until your child turns 18. As a joint owner, you'll have the ability to monitor and access this account if you wish. Most banks offer online and mobile access so your teen can check his status at any time. Some accounts also have text and email alerts that your teen can set up that will warn him of suspicious purchases or low balances, which can be helpful for a teen who is just getting used to the responsibility of managing his own money.
As you do your research, consider both the features and fees associated with each account you might choose for your child. Once you and your teen sign up, she may receive a checkbook and debit card in her name. Make sure she keeps these in a safe place and doesn't let anyone else use them, including her friends. Encourage your child to keep track of her account and check her balance regularly.
If she doesn’t keep track of her account, she might not realize the rate at which she’s spending, which means she could run the risk of declined or returned transactions, overdraft fees, or minimum balance fees. There are several ways your teen can keep track of her account.
Encourage her to log into her account at least once a week to view her balance and recent transaction history. If any of her transactions aren’t there, it may be because they haven’t posted yet. And each month when her statement arrives, she should sit down and review the charges and deposits. This is a great opportunity to sit with your child to recognize and talk about how much she’s spending, and on what. It can also help when she’s making a budget and deciding how much to set aside for a long-term savings goal.
Reviewing her transactions regularly can also help her notice any suspicious purchases. Unfortunately, account fraud is a rising concern, especially for teens. She should go through her statement, item by item, to verify each purchase is hers. If she notices any suspicious activity, she should be sure to contact her bank as soon as possible.
Almost all checking accounts have fees. Even a no-fee checking account, which might not have a monthly fee, will likely have other fees.
[Visual of a no-fee checking account with other potential fees including out-of-network fees, bounced check fees, minimum balance fees and overdraft fees.]
Teaching your teen about the fees associated with his account can help him avoid them. The three most common are monthly account fees, overdraft fees and fees for using out-of-network ATMs. Many checking accounts will have a monthly account fee or a monthly maintenance fee if the account drops below a minimum balance. Overdraft fees can be charged if your teen tries to withdraw more money than he has in his account. It can happen as a result of a check, a debit card purchase or an ATM withdrawal.
[Legal disclaimer: *If opted in for overdraft protection]
Helping your teen understand the finer details of all of these fees is very important, and can spare him or her from some very avoidable mistakes.
Getting a first checking account is a big step toward financial independence for teenagers. Helping your teen understand how their accounts work and encouraging them to get in the habit of regularly monitoring their accounts can help them learn how to manage their money responsibly. Doing so will help set a foundation for good money habits in the future.
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