Overview: How to Find & Open a Bank Account for Kids – All You Should Know
Managing money can be hard, even for adults. One of the best things you can do as a parent is to help your kids understand and manage their money. Setting up a kids bank account will help put your child on a path to financial success.
It is important to decide when having a kids bank account is right for your family and your child. Once you are ready to find a bank for kids, take the time to find one that is right for you. The best place to start is usually the bank where your accounts are held.
If your bank doesn’t offer the type of account you are looking for and you are still unsure how to find the best bank account for kids, the first place to start looking for your kid’s bank account is usually online; you can read about features and benefits from a variety of banks for kids.
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If a personal approach is more your style, set an appointment with a bank that has the type of account you want, and be sure to bring your child along.
Most of the banks will take the time to help you and your child understand what features are available and give you the personal attention that makes you feel comfortable trusting that bank to manage your child’s early financial life.
When you are looking at setting up a bank account for kids, there are two primary options; you could set up a kids checking account or a savings account. Or you could do both; each has different benefits for your child.
Checking Account for Kids
Let’s look first at the checking account for kids option. This account is more appropriate for older children and teenagers who are ready to start managing their own money. As your kids enter high school and prepare to attend college, setting up a kids bank account becomes even more important.
A checking account of their own will help them understand how to handle their money, checks, and debit cards before they leave home. Putting a kids bank account in place early will ensure that they understand the importance of how to manage their money when they are on their own.
You want to make sure that your child or children are mature enough to handle the responsibility of having their kids bank account before setting up an account for them. While you may have a 13-year-old who is responsible, you may have a 16-year-old who isn’t ready yet.
It is important to reinforce how important it is to manage a checking account for kids when setting one up for your child or children. Make sure that your kids have a clear understanding of what they can spend and the consequences of mismanagement and overdrafts. You want your bank accounts for kids to help them, not leave you to pay fees for insufficient funds.
Finding the Best Account for Kids
There are a lot of options available when are unsure how to find the best bank accounts for kids. It is important to find the right kind of account, and one that can grow with your child. Many student options will have low or no fees for students under a certain age.
Other features to look for include things like mobile banking, direct deposit, and debit cards; these will make it much easier to manage your kid’s checking account with little or no effort. To make sure that the account has all the features you and your child need, it’s important that you are there during the setup process.
You also want to find an account that you can easily monitor to ensure that your kid’s bank account is being handled properly and that they aren’t overdrawn.
Explaining Account Features
While most banks for kids will go over the account features with you and your child, it is important to do your own due diligence regarding the features of your kid’s bank account. Some of the important things you should cover with your child or children include:
- Balance Management: More than 50% of teenagers spend the money in their kids bank account as soon as they have a deposit. Teaching them to save will help them become more disciplined in their spending.
- Overdraft Fees: This is critical if the kids checking account you have set up with your child will include checks. Review the fee schedule and discuss the importance of checking their balance before writing a check.
- Debit Card Management: While a debit card is a great way to help your kid’s bank account work more effectively, there are also many ways in which your child could find themselves in trouble when using their debit card. Just one online app could result in your kid’s checking account ending up in overdraft.
- Understanding Their Statement: another important part of managing accounts for kids is the account balance statement. Taking time to walk through their first statement will help them on their path to money management.
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Encourage Them to Save
Now this might seem hard at first, as we know kids bank accounts are likely to be drained just after money is added, but this is a unique opportunity to help your children start on their path to financial freedom.
It will allow them to see the value in saving and set goals for things they want; they can contribute when they are ready for their first card or even help pay for college expenses.
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While setting up a kids checking account is a good way to help your children manage their money, a savings account is an excellent way to get them on the path to saving and investing. Just like with checking accounts, you will want to evaluate the options available at the various banks for kids.
There are several different types of savings options for kids bank accounts. It’s important that you choose the best bank account for kids and find the right savings plan for your child. Here are some things to look for when choosing an account:
- Interest Rate: Depending on your child’s saving goals, you may want to shop around for the best interest rate; this is always a good idea. Some banks will reward you for making regular deposits with a higher interest rate.
- Balance Requirements: Look for a bank with no or a low minimum balance requirements; this will help should you need to remove funds and then maintain a low balance in your kids bank account.
- Fees: If it’s going to take your kiddo some time before his allowance makes him a millionaire, you may want to look at a bank with a low or no monthly maintenance fee.
- Easy transfer options: if you are setting up a checking/savings combo for your kids bank accounts, make sure there are no fees for transferring from savings to checking.
Managing Bank Accounts for Kids
While the end goal is to see your kids checking account maintained by them, it’s going to be a learning process. You are still responsible for your minor child, so you want to make sure that you are helping with your kid’s checking account.
Teaching your kids how to manage their money will set them on the path to financial independence in the future. This is also a good time to talk with them about the importance of privacy and security to ensure that their accounts are protected. Teens may not realize that sharing account information or letting a friend use their debit card could result in a problem with their account.
Reinforcing the importance of security when managing bank accounts for kids can help them understand the importance of password and account protection. When dealing with your kid’s checking account, you can never be too secure.
It is also important to check in regularly with your child to reinforce good security habits. While we all want to think that telling our kids one time should be enough, when you are dealing with something as sensitive as a kids bank account, an ongoing conversation would be prudent.
Putting Your Child in Charge
This one is probably the hardest for parents: letting your child take ownership of their account. As they grow into an adult and their kids bank account no longer needs your attention, you may want to consider letting your child take over their checking account for kids.
As they move on to college, they will still need you (and probably some of your money too), but if you have set them on a path toward financial freedom, you can be confident that they are becoming a responsible young adult.
Money is one of the things young adults struggle with. The time you take with them when they are young to set up their first kids checking account and savings account will give them the tools to succeed in managing their finances as they start their own families.
It can be scary letting them take the reigns of their account, and even emotional. But you will always have the memories of opening their first kids bank account with them, and you can be proud that the steps you took with them has made them into the responsible adult they are today.
One of the best things you can give to your child is an understanding of the importance of managing money, and a bank account for kids is a great way to start. They will appreciate the time you put in helping them set up their account, and hopefully, do the same for their children.
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