Teaching your kids good financial habits is crucial, and it is best if you start teaching this knowledge early.
The best time to introduce your child to the basics of financing is in their teen years and the first step to helping your kid develop money management skills is by setting up their Neo bank for teenagers.
You would probably choose to open traditional savings or a checking bank account for your child, but you would be happy to know there are other options too.
Some banks allow you to open bank accounts, especially for high school and middle school kids.
Things to know before opening a banking account for your teenager
A solid financial plan for yourself and your family would enable you to make informed decisions. If you are planning to open a banking account for your teenager, there are a few things that you need to do first.
- Know the details and rules involved in opening an account
Not every bank allows teenagers to open bank accounts, and some have particular guidelines about who is eligible to have an account.
While some neo banks have a specific age limit for teenagers who want to open a bank account, others might need a parent or guardian to be the co-signer on the account.
That generally applies when the child is under the age of 18. This rule is in place for the protection of children and teenagers so that they do not overdraw their accounts.
Besides bank policies and legal requirements, there are some financial requirements too that you need to meet if you are opening a bank account for your teenager.
For example, many banks allow a person to open a savings account for little money. Therefore, depending on the account you plan to open for your child, you should look at the account requirements beforehand.
- Review the fees of accounts
There are many kinds of expenses that can deplete the balance in your teenager’s bank account, and you must be mindful of them. There are several kinds of fees that a bank might charge, which include check fees, minimum balance fees, statement fees, debit card fees, and more.
However, the bank won’t charge an overdraft fee from a minor. It would be best if you look for a bank that charges as few fees as possible so that there are no high costs to pay.
If you have been planning to give your child an ATM or debit card linked to your bank account, you must be mindful of the fees the bank might charge.
Though they won’t be charged anything while making withdrawals, they might have to pay a decent fee if using a foreign ATM.
- Know what perks the bank provides
Many banks offer their customers free services of various kinds, and you should find out if these services are available for teenagers as well.
These services include text alerts, mobile banking services, and online bill pay, and these can make your child’s banking experience more accessible and smoother overall.
You would also be glad to know that some banks provide budgeting tools and free financial and educational resources to teenagers. These can ultimately help them manage their money correctly.
You should check if banks in your area offer to check accounts for teenagers that bear interest. Though these may be difficult to find, they are pretty worth it. The interest rate may be low; however, every penny your child gets in the form of interest would benefit them in the long run.
- Know if there are any extra incentives
Several banks offer special incentives only for teenagers so they can practice better educational and financial habits.
For instance, several banks have a particular “cash for grades” program, which means if your child does well in school, they will receive cash incentives.
All your child needs to do is show a copy of their report card, and the bank will transfer the bonus money directly to their accounts.
If your child is in high school, it would be better to look for banks offering car loans to older teenagers or young adults.
Since teenagers generally have little to no credit history, such programs by banks help a teenager be qualified for a loan where the interest rate is also reasonable.
Depending on which bank you have chosen to open your child’s savings account, they might have to take a financial education course before applying for a loan. This would enable them to be more responsible about borrowing or lending money.
Conclusion
Choosing a bank account for your teenager is not different from choosing one for yourself. To sum up, here are a few things that you should keep in mind while you are on the search –
First, you must research the benefits that the banks offer and if there are any special fees that the bank might charge.
It is also essential that you teach your child and guide them thoroughly on managing their money. This will help them get a good start to gaining financial freedom.
Finally, before opening an account for yourself or your child, you should always have a proper financial plan.
