One tool for children, whether still in elementary school or teens with part-time jobs or start-up ventures, to develop financial literary is through having their own checking account. Also, for those who already are regularly receiving income, that might be a must-have. To reduce processing costs, more organizations only pay through direct deposit into a checking account, rather than through paper checks. Also, increasingly teens find they need to work in order to pay for 21st century necessities such as a smartphone. In addition, minors can begin to build their credit history. In lieu of a checking account they could have the income electronically onto a prepaid card. The disadvantage is that often entails fees for each transaction.
Some financial institutions, ranging from banks to credit unions, have recognized that parents and guardians want children to learn about money. Also it has become difficult in our capitalist society to navigate as an “unbanked,” that is, someone with no formal financial identity. Therefore, a growing number of financial institutions have created traditional and online checking accounts tailored for minors. This is useful for them both to attract the next generation of customers. In addition, there is a branding or public relations payoff of demonstrating their mission of helping young manage money.
However, not all financial entities have moved in this direction. Adults may have to shop around for this option or, if they have a good relationship with their financial institution, request that it provide this special service. Also, online or Internet banks which operate only in cyberspace, not through brick-and-mortar branches, may provide the service. One way to find out about the online option is to surf the web using keywords such as “Online checking accounts for children (or minors.)” Online accounts could pay interest. There could be an advantage, though, in financial literacy lessons to open an account in-person, giving the minor a direct experience in processing a financial transaction.
Because of state laws, parents or guardians are co-signers for the account. The children’s accounts have features tailored for those new at managing money. Those include the ability of the co-signer to monitor balances and all transactions. In addition, they are custom-made for small budgets, often including low or no monthly fees; low or no minimum balances; unlimited number of checks can be written; debit cards; and complimentary ATM cards which can be used anywhere in the U.S.
As with all financial decisions, comparison shopping is recommended. Kids who participate in the search could absorb a lot about the exploding kinds and number of options in financial services. In itself, that could be quite an education.