Introduction: All You Need to Know about Bank Accounts for Teens
Your teenage child probably looks at you as a walking ATM that spits out money as long as he or she pushes the right buttons. For some parents, those buttons can be the endless whining or the puppy dog look that melts your heart.
Most adolescents and young adults simply do not understand the ins and outs of managing money because they have no direct experience with a teen bank account or a checking account for teenagers.
It is not easy to learn that money is scarce and needs to be treated with responsibility and discernment.
Image Source: Bankrate
Luckily, in today’s banking world, there are a number of banks for teenagers that specialize in bank accounts for teenagers. These bank accounts for teens are a great way to introduce you teenagers to the world of financial responsibility. Furthermore, they will help your teenager to learn the process of managing money in a conscientious way.
In this brief article, AdvisoryHQ will look at some of the reasons why parents should consider opening a bank account for their teenager.
Furthermore, we will help you identify the characteristics of the best bank account for a teenager as well as explore what are the best teenage bank accounts available.
All young adults need firsthand experience in learning the art of managing money, and opening a bank account for teens or a special checking account for teenagers is a great way to help your child grow into a responsible adult.
Why Should You Open a Teen Bank Account?
“Mom, I need money for gas,” or “Dad, can I borrow your debit card again?” are words that any parent hates to hear. Adolescents and teenagers tend to think that money grows on trees or that there is an endless stack of bills that can be released simply through the swipe of a plastic card.
Opening a teenager bank account is a great way to dispel these myths and teach your teenager the importance of financial responsibility.
Checking accounts for teens are offered by a number of banks, and these bank accounts for teenagers are designed to specifically help young adults learn the ins and outs of managing money. The best teenage bank accounts will incorporate a number of tools to help parents turn a teenager bank account into an educational opportunity.
The best banks for teenagers will allow parents to open bank accounts for teens that will help them to start saving money for college. Though they may not put away enough money to pay four years of tuition, your teenager may be able to at least help cover the expenses for textbooks or other college expenses.
These costs, though symbolic, will help young adults discover the importance of budgeting and saving money for future expenses. Furthermore, checking accounts for teenagers also can help young people learn the basics of investing and saving money as well as other money basics such as keeping a balanced checkbook.
The best teenage bank accounts will also help young people learn how to manage money, avoid spending more than they have, pay bills on time, and other important financial responsibilities.
The best banks for teenagers will also help young people build their credit and a quality financial reputation from a young age.
What to Look for When Opening Checking Account for Teens
When opening a teen bank account, you will want to be on the lookout for a number of favorable terms and conditions. Since teenagers are not exactly well-versed in managing money, the best banks for teenagers will usually offer bank accounts for teenagers that have little to no fees.
It can be frustrating for a 13-year-old to find that half of her $20 allowance went to pay a monthly account fee that her bank charged.
It is also important that the teen bank account that you open doesn’t impose a minimum balance requirement. Teenagers are not supposed to be millionaires, so if their account dips into single digits once in a while, they shouldn’t be penalized for that.
Also, since many teenagers may have difficulties at first checking their account balance; the best bank accounts for teenagers often make it impossible for teens to overdraft from their accounts. This is important since parents often co-sign on the teen bank account that they open with their child and are financially liable if their child suddenly decides to go on a thousand-dollar shopping spree.
Image Source: NatWest
Another important quality to look for in bank accounts for teens is an account that offers certain perks geared toward teenagers.
Some checking accounts for teens may offer special interest rates to teenagers who save for college. Other teen bank accounts offer rebates, deals, and freebies that are of interest to young adults.
According to the British newspaper The Guardian, “If it’s freebies you are after, and you like films, the Nationwide account offers a fairly good perk: 25% off at Vue cinemas for a year for the account-holder and a friend/parent.” Other banks for teenagers in the United States offer similar perks.
Since the best bank accounts for teenagers are usually the beginning of a learning process for young people, it is also important to find a teen bank account offered by a bank that has locations close to the college campus where your teenager is planning to study.
The best banks for teenagers should allow your teenagers to easily switch over to an adult account once he or she comes of age and goes off to college.
What Are the Best Banks for Teenagers and the Best Bank Accounts for Teenagers?
The best bank accounts for teenagers come with a number of benefits that help teenagers learn the art of money management.
In order for that to happen, however, banks for teenagers need to allow parents or guardians to have control over the teen bank accounts and be able to impose certain limits on how the bank account for teens actually functions.
Some banks for teenagers offer a bank account for teenagers that allow parents to create a monthly budget together with their child. Teens or even preteens are issued a prepaid debit card that has a monthly spending limit.
Parents then load money on the card’s account and help their teens learn how to manage a monthly budget. In many cases, the monthly allowance that teens save can then be transferred to a savings account that many of the best banks for teenagers offer.
If your teen spends all of the monthly allowance within the first week of the month, then he or she will have to learn how to do without. In many cases, teens may find that when their gas money runs out because of bad budgeting or excessive spending, they are forced to take the bus to school or search for rides.
This can be a powerful tool offered through bank accounts for teens in helping young people to learn the importance of proper budgeting.
These co-budget programs can often be negotiated through banks that offer bank accounts for teens. It is also important that these teenager bank accounts allow mobile banking or have a mobile app that can be downloaded to your teenager’s phone. In today’s tech-driven world, teens are much more liable to be interested in learning financial responsibility if it can be done on their cell phone.
Nerdwallet.com recommends that “if your teen is glued to his phone, take the opportunity to transition him into mobile banking. A good bank app will offer push notifications about account balances, as well as the ability to deposit checks on the go and make person-to-person money transfers.
And some institutions have text features that make it easy to check account balances and recent activity, and they can send alerts that can help to avoid overdraft fees.”
Another important feature to look for in the best teenage bank accounts is flexibility. Teenage years are characterized by instability and change, and you don’t want to lock your teenager into a teen bank account that will leave him or her feeling chained to one system.
For example, when you first open a bank account for teens, you and teenager may agree to a monthly spending limit in order to avoid withdrawal fees or excessive spending. The feeling of power that can come with having a plastic card in your wallet or purse can be enchanting for many young people.
However, as your teen matures and approaches adulthood, it may be a good idea to remove those withdrawal limits so that your teenager can assume more responsibility over his or her finances.
The best bank accounts for teenagers will allow you that flexibility as your teenager grows into a responsible adult.
How Opening a Teenager Bank Account Can Change Your Child’s Future
Financial responsibility is never easy to learn. Many young adults who never learned how to manage their money through a teen bank account often face a rude awakening when they leave home and suddenly find themselves trying to pay rent, utility bills, tuition expenses, and still have money left over to actually eat.
The best banks for teenagers offer checking accounts for teens that help young people learn the importance of being responsible with the money they earn. Furthermore, teens can learn how to budget in order to save money for college or other future expenses.
A quality teenager bank account will also help your teenager develop a good reputation with a local bank so that he or she can develop the credit and trust needed for big expenses such as financing a car or their first home.
Lastly, by helping your teenager open a teen bank account, you are also helping him or her to learn firsthand through mistakes. We all have accidentally overdrawn from our bank account or forgotten to a pay a bill on time at some time in our life.
The best way to learn financial responsibility is through trial and error, and the firsthand experience learned through managing a bank account for teenagers will allow teenagers to begin the long process of becoming responsible administrators of their money.
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