Opening a teen bank account is a great way to teach them good financial habits. It will help them with money management skills, and learn basic banking needs. There are many banks that offer teen bank accounts to choose from. Finding the best one for your teen can be somewhat difficult. Below I will go over some pointers on how to open the right bank account for your teenager.
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Be Aware of the Rules for Opening the Account
Majority banks will have teen accounts to offer their clients. However, they’re not all the same when compared to one another. There are always specific rules and regulations to follow when you open an account. For example, some banks have a limit for teens who are older and a certain age. Other banks will require at least one parent to co-sign the account or be bank members if they’re under 18.
In other words, this will help protect your teen from overdrawing from their account. Overdrawing from your bank account never does any good to your credit score and can come with additional fees. Keep other financial requirements in mind while you search for the right account. Every bank varies, some will allow your kid to open a checking and savings account with a $1 deposit. Be aware of other ongoing balance requirements or fees that comes with each account you look at.
Compare Account Fees
Fees can easily get out of hand if your teen isn’t careful. So, it’s a good idea for them to know what kinds of things the bank will charge for. It’s also good to practice monitoring the account to see if there have been any changes or mistakes. Fortunately, minors will not be charged with an overdraft fee.
However, it will not protect them from other balance, check, card, statement, or monthly fees. An ideal account is to have as little fees on there as possible. This way it’s easier to keep the costs lower. If your teen gets a debit or ATM card that’s linked to their account, be sure they know what comes with it. Normally, these cards come with a price for how much it’s used. Most of the time they won’t be charged for withdrawing, but for using foreign ATM services.
Take Advantage of the Bank Account Perks
There are lots of banks that offer a large range of different financial services to their members. Find out what all of these services and benefits are and if it’s included in a teen account. Features such as: online and mobile banking, bill pay, and text notifications are very helpful in building good habits. This way, your teen is able to monitor their account much better whenever they need to.
Other banks will also have free financial education services and budgeting utensils. These features will help your teenager manage their money much better than without it. However, this perk is much harder to find for teen bank accounts. Keep an eye out for any institute that allows teens to sign up for an interest-bearing account. Rates will be lower than the traditional checking account, but it will add up in the end.
Search for Additional Incentives
Several banks will offer special incentives for teens to practice financial and educational habits. In other words, for students that make good grades in school, the banks will reward them with cash. Just have your teenager show the bank a copy of their report card and the reward will be deposited immediately.
For teens that are a little older, check out cash loans for young adults. Some banks offer this feature to make it easier for your teen with little to no credit history get a loan. Worry not, these loans come with a decent interest rate. There are some banks that will require them to take a financial education class to apply for the loan. However, signing up for a cash loan will enable your teen to be responsible when borrowing money. Just keep in mind loans aren’t always the best option to go for.
Conclusion
Looking for the right bank to open a teen account can be a hassle. There are many things to keep in mind and so many different options. But, it’s not that different from picking a normal bank account for yourself. Some key factors to look for are the benefits and price it comes with. Your young adult can learn more about what it’s like to have a bank account and how to manage it properly.
