What is a teen checking account?
A teen checking account offers a head start in the race to become financially savvy. While you’re under 18, you and your parent or guardian co-own a teen account as you learn the ropes of financial responsibility. There are minimal fees so you can get into good habits without being penalized for little mistakes. Issuers may impose spending limits and restrict which banking products you can access, including overdrafts.
Teen checking accounts are different from student checking accounts, which are typically reserved for those over 18. Both serve as stepping stones for teens learning the arts of budgeting, saving and responsible spending.
Here are some top reasons to open a teen checking account:
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First job or side hustle: Pick up healthy financial habits from your very first paycheck. Track earnings against spending, start saving and make purchases using your own debit card.
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Your financial future:?Safely begin building your banking history and get a leg up when applying for loans or apartment rentals down the line.
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Money management mastery:?Learn how to use budgeting and goal-setting tools so you can turn your dream of backpacking around Europe into a reality.
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Independent bill paying:?Pay for your phone bill, car payments and streaming subscriptions independently.
What are the age limits to open a teen checking account?
Teen checking accounts are usually available for individuals aged 13 to 17.
Checking accounts for teens vs. savings accounts for teens
A checking account for teens is your day-to-day buddy. Use it to pay bills, make purchases and access your cash. On the other hand, teen savings accounts are long-distance champions. Open one to tuck cash away, and watch the interest grow the more you save. Savings accounts tend to have higher?APYs, but there are usually strict rules governing what you can and can’t do. For example, you might have to maintain a minimum balance to cash in on high interest rates.
Pros and cons of checking accounts for teens
There are advantages and disadvantages for parents and young people when it comes to teen checking accounts.
How to choose a teen checking account
The best checking account for a teenager should include features to help introduce safe, responsible banking.
Consider these features when comparing checking accounts for teens:
- Look for accounts with minimal fees to avoid unnecessary charges.
- Opt for an account with parental controls. This enables parents to set limits and?supervise spending.
- Choose an account with preset spending limits.
- Ensure banking products are FDIC-insured?and have fraud and identity theft protection.
- Consider whether online-only or traditional banking is more suitable.
- Think carefully about whether to have access to overdraft.
- Explore each banking app and select one with budgeting tools and financial education resources to promote healthy money management.
Questions for parents about teen checking accounts
The best teen checking account for your family depends on your circumstances, goals and preferences.
Here are some key questions to ask to help you make a smart choice.
Can the parent set restrictions on the account?
Many parents of teenagers opt for checking accounts with parental controls.
Popular options include:
- Setting daily spending limits
- Restricting certain types of purchases
- Receiving real-time notifications about account activity
If you plan on supervising your teen as they learn how to bank responsibly, these tools offer a balance between autonomy and independence.
Does the parent need an account with the bank?
In most cases, yes, parents must already have a checking account with the same bank to?open a joint teen checking account. Check the terms and conditions for a definitive answer.
What happens when the teen turns 18?
At 18, providers may offer teens the chance to convert their account into a standard checking account. In some cases, the teenager might need to open a new account in their name only. Once they turn 18, they’re in the driver’s seat and have full control over their finances.
How to open a teen checking account
To open a teen checking account:
- Research fees, features and accessibility, and compare several options.
- Gather ID for both parent and teen, your Social Security numbers and proof of address.
- Visit a branch or apply online.
- Deposit funds to activate the account.
How to avoid fees with a teen checking account
Here are some tips for avoiding teen checking account fees:
- Opt for a provider with a large network of ATMs.
- Avoid paper statements.
- Maintain minimum balance requirements.
- Monitor account activity regularly to avoid overdraft fees.
- Set up low-balance alerts to prevent overspending.
For example, say your teen joins a bank with fewer than 15,000 ATMs, and the one nearest their home is out-of-network. The fee for taking cash out from an out-of-network ATM is $2.50. For convenience, they withdraw cash 10 times per month from that ATM, costing a total of $25 per month. Over a year, they spend $300 they could have saved by simply making sure their local ATM is in-network.
Alternatives to a teen checking account
Let’s explore some alternatives to teen checking accounts:
- Prepaid debit cards for controlled spending and no overdraft risk
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Kids savings accounts tend to have higher interest rates and promote long-term money management
- Making teens an authorized user of their parents’ bank accounts is low-risk and streamlines parental oversight
- Cash allowances help teens manage money day-to-day
- Credit-building apps educate teens about borrowing and building a credit score
- Digital budgeting apps teach budgeting without financial risks
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