One of the responsibilities of parents is to instill financial values in their children and teach them effective money management skills. At what age should your teenager have a checking account? While there is no “right” or “wrong” answer to this question, there are a number of factors to consider which will help lead you to a decision.
Should Your Teen Have a Checking Account?
Is your teenager working? If your teenager has a part time job, it's a good time to set up a bank account if they don't already have one. At the very least, a savings account is appropriate for a working teenager, and offers the opportunity to teach your child how to save a percentage of all income coming in. This financial skill alone can help them transition into responsible adult money management knowledge that can prevent carrying more debt than they can afford to pay.
Does your teenager pay some of his or her own bills? Often teenagers get their first car while they're still in high school. While some parents take on the responsibility for the extra expenses another vehicle in the household creates, it's not a bad idea to give that responsibility to your teenager. Car registration, car maintenance, insurance and gasoline are all necessary expenses of owning a car. A checking account can be used to pay for these expenses, and under your watchful eye can not only be a lesson in responsible car ownership but a lesson in checking accounts.
How to Choose a Checking Account for Teens
Checking accounts are not the same from one bank to another, or between credit unions. In fact, there are often a number of different checking accounts available within a single bank. Selecting the right checking account for your teens needs takes a little comparison shopping.
Your first consideration is whether or not the bank you wish to use allows minors to have a checking account. Some banks will not open an account for teenagers under the age of 18 – because a minor cannot be held to a contract. So if your teen overdrafts the account and spends more than he or she has – the bank can't legally collect on it if the teen decides not to make it good.
Some banks will open accounts for teens with two forms of ID; some require a co-signing adult to be the responsible party for the account. You might start with the bank that you already use to ask about their checking account for teenagers' policy. If they say they don't allow it, ask about co-signing the account. If you have a good relationship with the bank, they may allow you to set the account up even if their standard policy prevents minors from using checking account products.
There is a nationally available checking account for people under the age of 22 offered by Young Americans Bank in Denver (303-321-2265). You need a minimum deposit of $50 to open the account and should keep a minimum of $150 in the account to avoid a monthly service fee. Keep in mind that many merchants don't accept checks from out of state – so it may not be in your best interest to choose a bank from another state even if it does open accounts nationally.
When choosing a checking account for your teen, consider whether or not you want him or her to have access to the money with a debit card or ATM card. This creates another opportunity for financial lessons and discipline – but some parents fear it will encourage the use of credit cards in the future.
If your teenager is on track to go away to college, it's a good idea to get them familiar with how to use a checking account and keep track of their transactions. It's a skill many parents over look, and one that if teens are exposed to it before they go off on their own, will give them a head start in life.