Personal Insights

4 Factors to Consider Before Opening a Checking Account for Teens

Wondering if your teenager is ready for a checking account? Consider these four factors.

As your children grow older and more independent, you might wonder whether or not they are ready to take more control over their finances. A checking account can be a great first step in financial independence since it teaches them lessons about personal finances, banking, and more.

But before you open a checking account for a teenager, there are a few questions you should consider:

• What are the pros and cons of giving your teen access to their own checking account?
• What safeguards can you put in place?
• What’s the right age to open a checking account?
• What are some alternatives to consider?

What are the benefits of opening a checking account for your teen?

Developing healthy money habits is one of the most important benefits of opening a checking account for your teen. Studies show that practical, hands-on experience is the best way to educate teens about banking and money management. Giving your child access to a checking account and debit card can give them hands-on experience with important personal finance basics, such as budgeting, tracking spending, and saving, while also showing them how to maneuver the banking system.

For instance, letting teens pay for recurring bills like a streaming service subscription and one-off purchases like a meal out will give them helpful experience in managing their money. Whether they are using their own money or an allowance, they will also learn that their funds aren’t endless.

Walking through these financial scenarios when the stakes are relatively low can help set them up for success later when they’re putting money toward bigger ticket items like their first car or their first apartment.

In addition to giving teens practical experience with managing money, having access to a debit card can reduce the need to have cash on hand for purchases that come up as your teen begins to venture out on their own.

What are the drawbacks of opening a checking account for your teen?

While there are many benefits associated with letting your teen have a checking account, there are also some potential risks to consider. For instance, giving your child easy access to money without oversight could potentially lead to careless spending.

If the account has opted-in to overdraft coverage, your teen could also overdraw their account, which might result in an accumulation of hefty overdraft fees. If your teen consistently overdraws their account and accumulates unpaid fees, the account could potentially be closed by their bank, which could potentially make it difficult to open a new account in the future. For this reason, it’s important to consider establishing safeguards when opening a checking account for your teen.

Can a teenager open a checking account?

Banks in many states require parental involvement in a teen’s checking account, which is the best safeguard against some of the drawbacks of opening a checking account. Depending on the state and your child’s age, you may have to be a co-owner on their checking account. However, this can be a good thing as it will enable you to keep tabs on your teens’ spending and saving habits.

What safeguards should be in place for your teen’s checking account?

If you’re concerned about the risk of your child overdrawing their account, you should ensure you or your teen opts-out of overdraft coverage. Opting out prevents overdraft fees on certain types of transactions that exceed their available balance.

To help your child develop good money management habits, you can also remind them to check their account balance before they make a purchase or head out for a night with their friends.

Finally, schedule a regular time on the calendar to go over your teen’s spending history, show them how to balance their account, and chat through their progress towards saving goals. Consider establishing a “save, spend, give” model for your teen — this can be a great way to teach kids money management skills.

As your child shows success and responsibility in some of these areas, you might want to give them more freedom with their account to signify that you trust their judgment. Just make sure they know you’re there to help when they need it.

What is the right age to open a checking account for a teenager?

After considering the benefits, drawbacks and safeguards related to opening a checking account for your teen, you might be wondering when you should open one. In short, there’s no “right” age to open a checking account.

Banks maintain different age requirements when it comes to opening checking accounts, but most banks won’t allow a minor to open an account without an adult as a co-owner. But it’s important to note that just because a bank will allow you to open an account with your 14-year-old doesn’t mean that he or she is ready for one.

When you think about your teen’s readiness, you’ll want to answer a few questions first:

• Who is going to be contributing funds to the account: you or your teen?
• If your teen is going to be depositing funds into the account, does he or she have a job and regular income?
• Can your teen handle the responsibility that comes with managing his or her own checking account?

Answering those questions will give you a good sense of whether or not your teen is ready for a checking account.

What are some alternatives to a student checking account?

If you’ve decided that your teen isn’t quite ready for a checking account, a prepaid, reloadable card like the Regions Now Card is an excellent alternative. These prepaid cards look and act like debit cards, but they don’t charge overdraft fees. To obtain a Now Card for a child who is still a minor, you’ll first need to get a Now Card for yourself, then request an additional one for your child.

Opening a savings account for a minor is another good way to teach your teen about money management. You could even initiate a match program in which you agree to match a certain amount of money that your teen saves with a percentage of your own.

Key Takeaways

Whether or not you decide open a checking account for your teenager, it’s important to start discussing personal finance topics early and often. “By educating your kids on how to plan and save, you're investing in them so that they can become financially fit whenever they grow up,” explains Rachel Tatum, Financial Advisor at Regions Bank.

For more tips on how to raise financially confident kids, explore our guide to building generational wealth for families of all income levels.

Still have questions? Learn more about our LifeGreen checking accounts for students.