Should Your Teen Have a Checking Account?

There comes a time in everyone's life when independence is needed. It's been okay having your kid rely on you for money and its management, but eventually, a person needs to have their own funds and be accountable for them. A checking account is a great first step.

"A teen checking account can guide your child toward better saving and spending habits and make them more familiar with banking," says NerdWallet banking editor Tony Armstrong.¹

It's certainly an important part of life that will come into play sooner or later. So, how do you know when the time is right?

Make sure they're at the right age

The reality is, there isn’t a "right" age. As with many other aspects of your child’s life, you have to determine when they're ready. Are they used to receiving an allowance? How do they treat that money? Do they save or use it to buy things of worth or do they blow it all immediately? Do they have any financial goals? How soon are they likely to be out and about without their parents or other adult supervision on a regular basis?

Consider how responsible they are about other things

It's worth considering how responsible your teen is about other important things in life. For example, do they keep up with their studies? Are they punctual? Do they take care of their responsibilities without having to be reminded frequently? If the answer to these questions is no, then it may not be the right time to set them up with a checking account.

Make sure they know all the features

If your teen gets a checking account, take some time to go over all of the features with them, so they understand what they can and cannot do with the account. A good option for a teen starting out with their first checking account is Basic Checking, which requires just $50 to open. Better yet, the normal monthly maintenance fee is waived for people 25 and younger.

One major feature that your teen is likely to be most interested in is the debit card that accompanies their account. They will probably be using this much more than their checkbook.

As the New York Times put it, "Many children learn to save by stashing cash in a piggy bank or jar, then graduate to a basic savings deposit account. But as teenagers, they start to spend more — lunch while on a field trip, a movie with a friend — and may need an account that lets them make purchases with a debit card."²

Using and being responsible for a debit card is a good precursor to having and using a credit card when they get a little bit older. They can get used to having access to funds via a card without learning about credit card debt the hard way.

Help your teen get the account set up

It's worth noting that a teenager under the legal age, which is 18 in Nevada, must have a joint account with an adult. If the teen is 18 or over, they can open whichever type of checking account they prefer. You can help them get the account set up, either online or by going to the bank in person. Your child might feel more comfortable if you're with them in case they have any questions.

Check in on your teen's checking account activity

If you have a joint account, make sure you keep an eye on your teen's account activity. Are they making good decisions and being responsible? Are they keeping track of all their expenses so they don’t overdraw the account? Talk to them if there are any concerns. If it is determined that they aren't really ready, you can always close the account and try again when the time is right.

If you decide your teen isn’t ready for the responsibility of handling a checking account, you might consider a reloadable debit card like OnCard.³ As the primary account holder, the parent can transfer money to a card held by the teen (age 13 or older). This card can be great for managing allowances and providing teens or college students with access to money, which is controlled by the amount you load onto their card. If you have a teenager learning about financial independence, they can learn how to budget and plan for future savings with the easy-to-use app that comes with their card.

A checking account demands a level of responsibility that some teenagers are ready for and others are not. At the same time, opening one can help teach a teen financial responsibility and help prepare them for the future.

1. https://www.nerdwallet.com/best/banking/teen-checking-accounts

2. https://www.nytimes.com/2016/10/15/your-money/why-and-when-your-child-should-have-a-debit-card.html

3. For more information, read this Two Cents article: https://www.nsbank.com/blog/two-cents-blog/articles/2018/august/reloadable-debit-cards/ or visit https://www.nsbank.com/it-matters/oncard/

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC