Guiding Your Teenagers in Establishing Their Initial Checking Account

Teaching kids about money management is crucial, and knowing where to start can sometimes be tricky. A basic checking account is a good entry point since it’s something everyone needs as an adult. It’s helpful for parents to guide their teens in understanding checking accounts while they’re still living at home. Here are some tips for helping your teens open their first checking account.

**Features of a Bank Account**

The first step is to find a joint account that works for both you and your underage child. Typically, these accounts allow one parent and one child per account. When your child turns 18, they can take full control of it. Pursuing this type of account is advisable.

Think about your teen’s preference when choosing between an online or a physical bank. Many physical banks offer apps and online services, though not all are fully digital.

It’s a good idea to pick a bank that lets you open a savings account for your teen at the same time. This can help protect against overdraft fees, but note that you’ll need some initial funds to start a savings account.

Consider your teen’s income from part-time jobs or their first job to contribute to their savings account. You can also pitch in some money. Choose what’s best for your circumstances.

Important features for a teen checking account include:

– No monthly fee
– Electronic deposits
– No minimum balance requirements monthly
– Options for online transfers
– No ATM fees
– Online bill pay capabilities
– Automatic conversion to an adult account
– Interest on the account (if available)

**Alternative Banking Options for Teens**

Once you’ve considered your teenager’s banking preferences, it’s time to find the right bank. This might take some time. Start by checking whether your bank offers joint accounts for teenagers. If not, consider alternatives like credit unions that often provide no-fee accounts with better interest rates than regular banks. Remember, not all have advanced mobile banking apps.

For example, my credit union offers a joint checking account for teens with an interest rate on their monthly balance. Although 0.10% might not seem like much, interest rates were much higher before COVID-19.

Your teen may eventually switch banks as an adult, especially if the current one lacks robust online banking options.

**Options to Consider for a Teen Checking Account**

If you don’t belong to a credit union, there are other great checking account options for teens, such as:

– Alliant: Fully online with a 0.25% APR, no fees, no required minimum balance, and access to over 80,000 free ATMs.
– Capital One: A no-fee online account with 0.10% APR, no minimum balance, and text notifications for all transactions.
– Chase Bank: No monthly fees with at least one direct deposit per month, and provides plenty of online and physical branch options.
– USAA: Designed for military families, no fees, automatically converts to an adult account at 18, and offers excellent online banking and physical branches.

**Summary of Teen Checking Accounts**

Parents have a responsibility to prepare their teens for financial independence. Introducing them to checking accounts is a big step toward financial success.

Start by understanding your teen’s banking preferences, then explore what your bank offers. If it’s not a good fit, look into other options. Have open discussions with your teen to further their financial learning. When teens are well-educated in financial matters, it’s a win for parenting!

Have you helped your teen open their first checking account? What were the deciding factors for you?