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Generation $$$: NerdWallet’s Take on Teen Checking

by on April 17, 2012

If there’s one thing that’s likely to be on a teenager’s mind, it’s money: how can I get some, and more importantly, what should I buy with it? But for most teens, the question of where to keep that money safe between payday (or allowance day) and the next purchase is not nearly as intuitive.

Selecting both the right financial institution and the specific teen checking account is an important and potentially confusing task for teens and their parents; an uninformed choice could leave both on the hook for some serious fees.

101 on teen checking – what is it? 

Many different institutions offer checking accounts for teens, generally 13-17 years old, and a few offer checking accounts for kids, too. ING’s MONEY account is open to kids as young as 8. These accounts offer the same basic functionalities of regular checking accounts, namely different ways to access and manage your money. If it’s between hiding your money under your mattress and getting a teen checking account, get the teen account – it’s a great first step to learning how to manage your money.

Uneasy about getting started?

Not to fear, you’ll get plenty of guidance and educational tools to go along with your new checking account. For liability reasons, an adult guardian is required to become a joint-owner of the account for minors (under age 18) in most cases. However, that requirement varies from bank to bank. A joint account gives parents general account access – along with their child – in case it’s needed. For example, Wells Fargo’s Teen Checking account gives the adult co-owner access to account information, alerts for account activity, and the ability to easily transfer money into the account.

It’s a big first step

Financial institutions are usually looking to build a relationship from an early age, and youth checking is a good way for them to establish their first contact with customers. A study of young adult membership with credit unions shows that approximately 30% of young adult customers opened their first account at their institution prior to age 18.

Teen and youth checking accounts typically have no monthly fees or fees that are easy to waive. For example, some accounts have no monthly fee when you sign up for online statements. If you are thinking of opening a teen checking account, keep reading. We’ll go over some common fees and other considerations (including our top free picks).

Don’t forget to do your homework… 

Despite generally low/waived monthly fees, banks are not shy about charging other usage fees for things like out-of-network ATM withdrawals and overdrafts:

  1. Out-of-network ATM fees can cost up to $2.50/transaction. Some banks, like Capital One 360, will waive these fees.
  2. Overdraft fees: Parents and teens should be especially concerned about the possibility of an overdraft until you’ve learned how to monitor and maintain your account balance. Our analysis of teen checking accounts indicated that overdraft fees can vary from $15 to $35 per overdraft. In addition, some banks don’t cap the number of overdrafts they charge per day (or have really high maximums): for example BB&T’s Student Banking account has a maximum of 8 overdrafts per day (compared to Wells Fargo’s 2 per day), meaning if you overdraft your account but continue to use your debit card unknowingly, you can be charged up to $280 in fees per day ($35 x 8 times)!

Don’t forget to look beyond the obvious. Consider alternatives to big banks:

    1. Internet banks like Capital One 360 are a great option to avoid any fees and get access to some cool online tools. The Internet has made it possible to easily log on to your account from anywhere and at any time. An online account is just like any other account, debit card included, but there’s no need to wait in line at the bank.
    2. Credit unions are great for personal interaction and customer service. They also offer many of the same low- or no-cost accounts and features as a big bank. You can generally expect free online banking and low minimum opening deposits. Some accounts even pay interest.

Graduating from teen checking

Consider asking the bank what the age limit or student status requirement is for the account. More importantly, ask what happens to the checking account once a teen reaches the age limit. New and unexpected fees may apply.

First checking account? Make it free checking

There are plenty of $0 monthly fee accounts out there to help teens ease into financial responsibility.  Now that you know more about what teen checking really is, it’s time to get started. We’ve put together a list of our recommendations for institutions with great (and FREE!) options for youth or teen accounts.

Affinity Federal Credit Union (Basking Ridge, NJ) – Youth Connect

As New Jersey’s largest credit union, Affinity boasts 16 branches across the state and is open to anyone who is an employee of a participating business, a member of a participating association or club, or an immediate family or household member of an existing member. Affinity offers its Youth Connect package to teens ages 13-17 with an adult co-owner. There’s no monthly fee and no minimum balance requirement. Plus, your balance earns some interest at any level. This account even waives up to 8 out-of-network ATM transactions each month, allowing you the flexibility to withdraw cash wherever you might be. To help young members prepare for their financial future, Affinity’s website provides some educational tools like a College Planning Center. As April is Financial Literacy Month, we should all be on the lookout for ways to become savvy with our personal finances.

Premier America Credit Union (Chatsworth, CA) – New Generation Checking

It’s always essential for organizations to be looking to the new generation, and Premier America knows it. This credit union offers its youth and student members a variety of account options, including New Generation Checking, an account for teens 13-17 with absolutely no monthly fees or per-check charges. This account requires just $25 to open and a parent or guardian set up as the joint owner to give teens experience managing their first checking account with some adult oversight. Membership is open to those living, working, or attending school in Ventura County, San Fernando Valley, Santa Clarita Valley, and most other areas of Los Angeles County. You may also join if living within 10 miles of the Westchase branch in Houston, Texas, if you are a family member of a current member, or if you are an employee/member of an eligible organization.

University Federal Credit Union (Austin, TX) – Teen Checking

If you live in Austin and want to support your community, University Federal Credit Union (UFCU) is the place to bank. As Austin’s largest locally owned financial institution, where better to entrust your money as a teen or parent? The Teen Checking account is perfect for the 13-17 age range. It has a low out-of-network ATM fee of $1, a minimum opening deposit of just $25, no monthly service fee, and to top it off, 2.5% APY on balances up to $500. A legal guardian is required as a joint owner, but once you hit 18 years old, your Teen Checking account automatically converts to the Free Checking account, so you won’t have to worry about getting any unexpected fees as your birthday gift. Check out their membership requirements to see if you can apply: employees, members, and students of participating organizations as well as immediate family of existing members are eligible.

Telcom Credit Union (Novi, MI) – FU$E Checking

Telcom has a rich history going back to 1936, so you can be sure that you’ll find the services and products that you’ll need as a future member. The FU$E line of deposit accounts for youth and young adults includes the perfect option for the 16-23 crowd. You can open a FU$E Checking account (with an adult co-signer if you’re under 18 years old) that has no monthly maintenance fees and come with 150 free FU$E checks to get you started. Sign up for email or text alerts to get your important info on the go. What’s more, if you join now, you could be eligible for one of Telcom’s five $1000 college scholarships for high school seniors! There are plenty of ways to become a member of this Detroit-area credit union, one of the simplest being a $2 donation to the Salvation Army Bed and Bread Program (which Telcom will match).

Connex Credit Union (North Haven, CT) – Teen Green Checking

Connex’s Teen Green Checking account melds the benefits of a traditional checking account with many other features tailored to their teen members. It has no monthly fee or minimum opening deposit, comes with free online services to help you manage your money, and it even pays interest. Worried about overdrafts? Connex CU gives you 2 coupons per year for an overdraft fee rebate! Any member ages 13-18 can open a Teen Green Checking account with a parent or guardian signature. Connex’s membership requirements are simple: anyone who lives, works, worships or attends school in New Haven, Hartford, or Middlesex County can join.

FORUM Credit Union (Fishers, IN) – Aware Teens Checking

Not only does this account allow teens to gain valuable experience managing their money for no monthly fee, it also provides the opportunity for them to join FORUM’s Aware Teens Reward Program and interact with fellow young credit union members through the Aware Teens Blog. You can get entered into monthly points drawings for things like making a deposit to your account, commenting on the Aware Teens Blog, and referring friends to the program. Use the points to get gifts ranging from magazine subscriptions to big screen TVs! The account is available to teens ages 13-19 (parent or guardian joint-owner required for minors) who meet the membership requirements. You must be affiliated with a Select Employee Group, related to an existing member, or live/work in a qualifying county or township.

Capital One 360 – MONEY

Capital One 360 does things a little bit differently than a traditional bank. They do business primarily online, over the phone, or via mail. As we’ve already mentioned, their MONEY account for anyone ages 8-17 (with an adult joint owner) is almost entirely devoid of any fees. Pretty much the only applicable charges are for overnight delivery of a replacement card and a small amount of interest on any overdraft amount (no fee per item).

US Bank – Student Checking

With a big institution like US Bank, you know that just about anywhere in the United States, you’ll have access to a branch or ATM. The Student Checking account is for those enrolled at a high school, trade school, technical college or university, so a teen can keep the same account throughout their college years. The Student Checking account also offers no monthly fee, and 4 free non-US Bank ATM transactions per month. To apply, all you need is a $25 minimum opening deposit and an adult co-owner if you’re under 18. Also, make sure to take advantage of account alerts via text or email to help keep an eye on your balance and activity.

South Carolina Federal Credit Union (North Charleston, SC) – Teen Checking 

South Carolina Federal’s slogan – “Life Simplified” – says all you need to know about their products. Their Teen Checking account is no exception. No monthly fees or minimum balances are required once you open an account with just a $25 opening deposit and an adult joint owner. Free online, phone, and mobile banking is included, so you can access your account in a variety of ways. It’s open to anyone ages 13-17, and you can switch to MY Checking (perfect for members 18-25) when you’re ready to head out and start banking on your own. Membership is open to anyone who lives, works, worships, or attends school in the Charleston area (check for all of the eligible counties), or is related to someone who meets the requirements.

Hampden Bank (Springfield, MA) – Teen Checking

For Hampden Bank, teen checking is synonymous with FREE checking. Their account for ages 15-18 will help you to get the experience of managing a checking account without worrying about any monthly fees. It’s just $10 to open and includes free basic checks and bill pay. Hampden also looks out for its young members by discounting some common checking account fees for ages 18 and under. Insufficient funds/overdraft fees (if they should occur) and stop payment fees are just $5 per item! Stop in to one of Hampden’s 10 locations in the Springfield area to open your new Teen Checking account and begin your financial freedom.

STAR Community Credit Union (Chico, CA) – Teen Checking

Teens ages 16-18 can join this credit union and start banking at an institution with close ties to the Chico community. With a parent or guardian’s guidance as a joint owner, you can get a quality free checking account with a free first box of checks and no per-check charges. Your first 4 out-of-network ATM fees are waived, and are just $1 after that. Maintain a relationship with STAR into your adult years and your Teen Checking account will be automatically converted to a Free Checking account, so you’ll continue to get the same freedom from monthly fees. Students of any school in Butte County can join, but that’s not the only way you can become a member.

OnPoint Community Credit Union (Portland, OR) – Buzz Checking

If you’re 13-17 years old, OnPoint’s Buzz Checking account for teens is the perfect opportunity to “Declare your financial independence!” It takes just a $25 minimum deposit to open (with an adult co-owner) and allows you to access your cash without fees at over 50,000 OnPoint, CO-OP, and MoneyPass ATMs nationwide. It’s simple, flexible, and – best of all – totally FREE of monthly service charges. OnPoint serves Benton, Clackamas, Columbia, Lane, Linn, Marion, Multnomah, Polk, Washington and Yamhill counties in Oregon as well as Clark and Skamania counties in Washington. Membership is open to anyone who lives or works in these counties, or to family of current OnPoint members.

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  • Seo Nashir

    Good article.