With all of the technological advances in the financial world, writing checks is becoming a things of the past. Many children and teens may have a savings account, but they may need some kind of an account for the money they may earn that has other benefits. Many savings accounts may have a minimum balance required without incurring additional fees or may limit the number of transactions per month without additional fees.
When looking for a checking account for a teen there are certain things to consider.
Debit card
Since most establishments accept debit cards now, it may be beneficial to consider a checking account that can have a debit card tied to it. It is also wise to have at least one check or some cash with you most of the time in case debit cards are not accepted or their system is not in order at that time.
Although debit cards are handy it is important to remind teens that it is necessary to record their spending and not overdraw their account. When you are not physically handing over the money it is easy to overspend. If you are overdrawn on your account, each debit that goes through the bank until your account is replenished will incur a fee of up to $39. So even an expense as small as a burger could end up costing you a considerable amount if there are a number of other transactions clearing the account while it is overdrawn.
Unlike a credit card which you have a grace period to pay the balance, spending with your debit card is deducted from your bank account almost immediately, usually within a day or two.
Check on minimum balances
Some checking accounts will offer interest payments like savings accounts. In most cases, these accounts will require a minimum balance of $500 of so. If it is likely that you cannot maintain that requirement, it is advised to apply for a checking account without the minimum balance requirement. If you don’t maintain that balance you will incur additional monthly fees.
Automatic deposit and withdrawals
Depending on what kind of company they are working for, their paychecks may be automatically deposited by the company. In these cases it is important to know when the checks are usually deposited so they do not spend money before it is in their account. Even though they are usually paid on a certain day, it may vary in some cases by the date falling on a weekend or a holiday. Most major banks allow access to your account online, so you can check your account at any time.
It is also easy to have some payments, such as car payments set up to automatically deducted from your account each month. Again, even though it is automatically deducted it is important to keep record of it so you do not over spend the money in your account.
When teens start earning money of their own there are considerations to keep in mind when applying to open a bank account for them.