Reader Question: How to Find a Good Checking Account for a Teen

A reader named Ann recently published the following question on the Dough Roller Facebook page:

Why are banks not opening checking accounts for teens, even though their parents are on the account? My 16 year old granddaughter has only the option of her salary being direct deposited into a checking account or receiving a card with her salary loaded. However, whenever she takes money from the card she is charged $3.00. Are there any better options to control her savings, spending, and not having to be charged repeatedly? Thanks.

Ann’s question couldn’t have been more timely for several reasons. First, my brother recently started a new job that required payment via direct deposit. His employer will not cut a paper check. He ended up getting a no fee prepaid card and set up direct deposit for free. Second, our daughter who is 17 just started her first job, and she and I will be opening a checking account for her. I’m excited because it gives me an opportunity to work with her on managing money. We’ll be working on everything from an emergency fund to a ROTH IRA.

So back to Ann’s question. How do you find a good checking account alternative for a teen? As easy as this question may seem, there are two hurdles we have to clear. First, a bank won’t open an account with a minor unless a parent or guardian is also on the account. Contracts with minors are not enforceable (they are voidable by the minor is most states), so a parent or guardian is a must.

Second, many banks don’t have products designed for teens. Because teenagers generally don’t have a lot of money to put in the bank, some financial institutions have made the business decision that these types of accounts aren’t worth their time and effort.

So for many banks, while you can always open a checking account, you may get hit with unnecessary fees. If I were going to choose a prepaid card for my teen, I’d go with the American Express prepaid card. It’s free, has excellent benefits (e.g., free roadside assistance, and currently offers a signup bons). But if you want a checking account, I have two suggestions.

The first option is to use the same bank used by the parent or guardian. They may not cater to minors, but if you have a good relationship you may be able to open a no fee checking account with a minimum deposit. I like this option because I think it’s helpful for a teenager to know their way around a bank. I like the idea of my daughter learning to interact with bank tellers. It may seem simple, but for a teenager, these things can be very intimidating.

The second alternative is a checking account from ING Direct. ING has online checking accounts specifically designed for teenagers. There are no fees, the accounts actually pay interest, and the website is terrific. And they are regularly running signup bonuses for new accounts.

There are other options, including some very attractive offers. We maintain a list of bank accounts for kids that is worth checking out. And if you know of other great banking alternatives for kids, please let us know.

Published or Updated: March 24, 2014
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. I’ve heard great things about Wells Fargo from my parents. They created a checking and savings account for my little brother, and it is connected to their account, so there are no fees. It’s pretty convenient, and they just regularly deposit money into his account for use. Nevertheless, like you said, I’ve heard great things about ING Direct as well!

  2. Zanne says:

    There is a credit union that actually caters to teens in my area – and they maintain a branch at her high school – literally, inside the school. They run promos – like a entry into a draw for a free iPad if your child purchases a savings bond, or to the ones who deposit the most money into their linked savings account, etc. When my child needed a checking account for her pay, she went to the branch, brought home the paperwork, and we completed it. Then she took it back and they opened the account and sent her a debit card. I have seen many statements from this Credit Union, and when reviewing hers, can see no difference. She’s had it for 18 months now, and it works really well for her. I showed her how to access online, so she can check her balances regularly. That also takes care of the potential overdraft situation. She’s learned how to go to the bank by herself and get her business taken care of. (I think she was nervous about doing it alone, but she conquered her nerves and got the job done. I think that element was just as important as the convenience of the account.) She’s also saved about $800 so far. (I make her save a percentage of ALL of her money, including gifts and report card money. I think saving is a habit, and I mean for her to have the habit.) She did driver’s ed last fall and loved being able to use her debit card to get a bottle of juice when they stopped for fuel. (Her school also issues identification cards with photos on it that each child has to wear everyday. The Credit Union thus had identification of the child and I guess ultimately the parent or guardian.) I live on the Mississippi Gulf Coast, and the Credit Union is Keesler Federal. There are no fees and the minimum was $100 to open, $5 of which goes in to the share account and has to stay. You can spend everything else.

  3. Ann McElhinney says:

    Thanks so much for answering my question. The information was very useful and we decided to go with the ING option. Your blog has saved me money on several occasions and I appreciate your taking the time to answer my question so completely. Have a safe summer!

    • Rob Berger says:

      Ann, happy to hear you found a good option. ING is one of my favorites!

  4. Shailyn says:

    I’m glad I have found this blog, I’m seriously thinking of opening bank account for my teens because I want to teach them to save money. I might use the same bank as I have to avoid hassles since I am already an existing client.

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