Opening a bank account is a rite of passage for any teenager who is earning income. It is the first step in the process of becoming financially independent and may be followed by obtaining a credit card a few years later.
If you or your teenager are planning to open a bank account, here are some steps to follow:
- Determine which features are important to you. Would you like a bank that offers free checking? (These are getting harder to find, but there are still some out there.) Are convenient ATM locations important to you? Would you prefer to use the bank your family uses? What type of account do you want to open—checking or savings or both?
- Research the bank you choose to make sure it is FDIC insured. Most banks are FDIC insured, which means your money, up to $100,000 is insured should the bank go out of business or some other event occur.
- Go to the bank to open the account. You will need to bring identification and perhaps your social security card as well as the money you plan to deposit. You will sign several papers, and then you will be given your account information as well as your temporary checks if you opened a checking account. The checks will come in the mail in a few weeks. You may also be given an ATM card.
As you can see, opening a checking account is not difficult and is a relatively quick process. As you earn more money and your needs change, there are a few other options you may want to consider:
-If you go away to a college a few hours or more from your home, you may want to open a new bank account close to your school so you can easily deposit money and access ATMs.
-Online banks can offer higher interest rates on your savings accounts. While you probably will want to keep your brick and mortar bank account, an online bank account can supplement your current account and offer you higher interest rates and lower fees.
-A bank account is your first step toward financial independence. Be careful to not have checks returned to you due to insufficient funds. If you are not responsible with your checking account and frequently bounce checks, you could lose your bank account and be submitted to the ChexSystems, which means it will be harder to open a bank account in the future. While it is not impossible to open a bank account after being reported to the ChexSystems, you will probably have to pay higher fees with a second chance checking account.
A checking account is relatively simple to open and is your first step to financial independence. Parents may want to consider opening checking accounts for their children who are as young as four or five to deposit money from their allowance or cash birthday or holiday gifts. You will need to be a co-signer for your dependent child, but your child will probably be happy and proud to have his own savings account and watch his money grow.
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