If you wanted to teach you child or dependent financial responsibility the best way is to open a checking account for them. Find out the Best Checking Account for Your Teen.
If they are less than 18 years old, your account will have to be linked to theirs. Find out what you need to bring to open an account here.
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Checking Accounts for Teens
While writing checks has become less common, checking accounts are still useful to allow teens to make purchases.
Checking accounts still come with debit cards so they can shop. Whereas Savings accounts limit your transactions per month. This is a federal regulation but also prevents you from using up all the money in your account.
It is incredibly important to teach your teen to monitor their checking account. Poor account management affects their credit and follows them around through ChexSystems. This is why teen accounts are usually linked to a parent or guardian.
You can set-up overdraft protection usually to transfer funds when your teen’s account balance is negative. Similarly, you can always set-up automatic transfers, almost like an allowance, to supplement your teen.
What Should You Consider
It is definitely easier to spend money than to save money when you have a debit card. It is just as difficult when you have a Credit Card. Before you open a checking account you should keep these things in mind.
| Does your Teen have a job or are they receiving an allowance? | You may want to consider placing spending restrictions or funding their account to support them. |
| Do you make them save a percentage of their income? | Consider opening a Savings Account in conjunction that takes a set amount each cycle. |
| How much can they spend a statement cycle? | Some accounts allow you to set spending limits, much like a credit limit, on your child’s account. |
| What can they spend it on? | You can monitor your child’s account by linking it to yours or by receiving electronic statements and notifications. |
Mobile and Online Banking is growing more sophisticated. This makes it more easy and convenient at times to manage your Teen’s Checking account through a digital portal.
Furthermore, you should review these features before signing-up for an account.
- Minimum Balance requirements charge you for dropping below a threshold. It is very easy to get behind on fees and eventually hurt your credit score.
- Fees can suck the life out of an account very fast. Financial institutions can charge you for bounced checks, overdraft protection, ATM usage, and more. We recommend you review the terms and fee schedule of an account before applying.
- Interest Rates may seem attractive at first, but sometimes there are outrageous requirements to earn the rate. Sometimes your teen will have to use their debit card at least 25 times a month to earn an irrelevant rate. Furthermore, this may also teach poor spending habits.
Accounts like Chase College CheckingTM offers no monthly service fees, Online and Mobile banking, and a $100 bonus if you meet the requirements.
Conclusion
Virtually all of the flaws, fees, and frightening terms and agreements can be avoided by teaching your Teen financial responsibility.
Opening your Teen a Checking account can teach them to be conscious of their money sooner rather than later. If you want to get started today, explore our guide of the best Bank Promotions to find a checking account suitable for your teen’s needs and habits.
