Teaching kids about money is a crucial part of their education. The topic can be overwhelming, so a good starting point is setting up a basic checking account, which every adult eventually needs. Helping your teenagers understand how checking accounts work while they’re still at home can be really beneficial. Here are some tips to help your teenagers open their first checking account.
**Choosing the Right Account**
First, find a joint account that you and your teen can share. These accounts typically switch to full control by your child when they turn 18. This kind of account is ideal. Consider whether your teen would prefer an online bank or a traditional brick-and-mortar one. Many physical banks still provide apps and online services, but some might not be fully digital.
It’s also wise to pick a bank that lets you open a savings account at the same time, offering a safeguard against overdraft fees. Starting a savings account usually requires seed money. Look at your teenager’s income from side jobs or their first job to fund this account, and you can also pitch in some money if needed. Choose what works best for your situation.
When selecting a checking account for your teen, some key features to look for include:
– No monthly fees
– Electronic deposits
– No minimum balance requirement
– Online transfer options
– No ATM fees
– Online bill pay
– Automatic conversion to an adult account
– Interest on the account (if possible)
**Exploring Bank Alternatives**
Once you have a sense of your teen’s preferences, it’s time to find the right bank, which may take some time. Start by checking if your current bank offers joint accounts for teens. If not, look into credit unions. They often provide no-fee accounts with higher interest rates than traditional banks, although not all credit unions have high-tech banking apps.
For example, my credit union offers a joint checking account for teens with a small interest rate on the monthly balance. Even though 0.10% isn’t much, it was a lot better before the interest rates fell due to the pandemic. Your teen might not stick with the same bank as an adult, especially if its online services aren’t up to par.
**Other Checking Account Options**
If you’re not a member of a credit union, there are still many good options. Some of the best checking accounts for teens include:
– **Alliant**: An entirely online bank offering 0.25% APR, no fees, no minimum balance, and access to over 80,000 free ATMs.
– **Capital One**: A fee-free online account with 0.10% APR, no minimum balance, and text notifications for all transactions.
– **Chase Bank**: No monthly service fee with at least one direct deposit per month, and has plenty of online and physical branch options.
– **USAA**: Designed for military families, no fees, automatically converts to an adult account at 18, and offers good online and physical banking services.
**Wrapping it Up**
Parents have the responsibility to prepare their teenagers for financial independence, and introducing them to checking accounts is a crucial step towards financial success. Start by understanding your teen’s banking preferences and reviewing the services your bank offers. If your current bank isn’t suitable, don’t hesitate to explore other options. Engaging openly with your teen and helping them with their banking can significantly contribute to their financial education. A teenager who is knowledgeable about finances is definitely a win for any parent!
Have you helped your teenager open their first checking account? What factors were most important in your decision?