As your teenager grows into an adult, the time will come when they are ready to have a free checking account. You may wonder why a teen would need a bank account. The answer is the same as everything else we do for our kids: To prepare them for the future and make sure they are ready to handle life in the adult world.
Why Get Your Teen a Free Checking Account?
There are many benefits to getting your teenager a free checking account. This is true even if they don’t have a steady job yet. When your teen becomes an adult, he or she will need a bank account if they have any hope of avoiding the trials, tribulations, and neverending fees they will face without one. But checking accounts come with big responsibilities.
If your teen isn’t well-versed in how basic banking works, they are headed for trouble when they make it out into the real world. Getting your teenager a free checking account will prepare them to manage their money once they are on their own. Sadly, teens learn surprisingly little in school about bank accounts and managing money. This means that parents need to teach these things to their teenagers to get them ready for adulthood. Here is what your teenager needs to know about having a checking account.
Teaching Teens About Checks
There are two main types of bank accounts. Checking and savings. But there is more to having a checking account than just writing a check. Teens also need to be taught that when they write a check, they need to write it down in their check register. This is how they will be able to balance their checkbook and keep track of how much money they have in their account. Writing a check for more money than you have available leads to big fees that can add up very fast. Learning these lessons as a teenager will save your child a lot of headaches (and money) in the future.
Helping Kids Learn to Use a Debit Card
Teenagers these days will probably end up using their debit card much more often than they do their checkbook. One advantage of this is that debit cards usually won’t let you spend more money than you have in your free checking account. This means that your teen is less likely overdraw their account. However, it is still possible. For this reason, teach your teen that they should still write down any debit transactions in their check register.
Learning About Online Banking
Online banking is another thing teenagers need to learn about to successfully function in the world today as adults. Teach your teen that they can use online banking to check their balance and past transactions. Online banking also allows you to pay bills and transfer money between accounts, such as from a savings account to a checking account.
Best Free Checking Accounts for Teenagers
You’ve decided that your teenager is ready for a free checking account, but which one should you choose? Many banks now offer special checking accounts for teens. You should compare the available options in your area to find the bank that will best fit your needs. Do you need certain hours? How do their fees compare with competitors? Do they offer any perks?
The best kind of bank for your teenager — or anyone — is a credit union. Credit unions are community-based non-profits and don’t charge as many fees. Most are networked with other credit unions across the country so your teen can still do their banking when they’re on their own. Since you’ll need to sign on as a joint owner, you may also want some limits put on the account. Investopedia notes the following banks have these kinds of checking accounts for teens.
- Capital One
- Wells Fargo
- Chase Bank
- Union Bank and Trust
- USAA Federal Savings Bank
- Alliant Credit Union
- Citizen’s Bank
- Bank of America
- First National Bank and Trust
Parental Oversight
No one in their right mind would turn a teenager loose with a free checking account without close parental supervision.
“It’s critical for parents to be involved through the whole process, making sure the kids have the fundamental concepts down before they go into the bank and (to be) really active once they open the account,” says Paul Golden, a spokesman at the National Endowment for Financial Education, a nonprofit organization that promotes financial literacy.
Banks make sure this is the case by not allowing teens under 18 to have a checking or savings account without a parent involved.
“The idea is that it’s a partnership between the teen and the parent or guardian, or whoever is on the account, and the bank to help them learn how to manage the account,” explains Erin Constantine, senior vice president at Wells Fargo Bank. “It’s a lifelong skill. They’re going to need to understand how to manage their money and their accounts.”
Free Checking Accounts Prepare Teens for Adulthood
Getting your teenager a free checking account can help prepare them for adulthood. They can learn the basics of banking and how to manage their money. Teaching these essential skills to your teen today will them ready to enter the real world tomorrow.
Helping your teen open a checking account.
Featured image CC by 2.0, by Tax Credits, via Flickr
