Knowing how to manage money is a critical life skill — which is why it's worth learning as early as possible. But you don't want to overwhelm your child with the responsibilities of a checking account before they're ready.
Let's look at what to consider when deciding whether it's the right time to open an account for them.
Teen (or student) checking accounts, designed for children ages 13 to 17, are available from some financial institutions. Despite the name, these accounts may be open to children as young as 8.
Alternatively, a bank or credit union may only permit adults (i.e., people 18 and older) to open any type of account. For example, an institution that doesn't offer teen/student accounts may instead provide the UTMA (Uniform Transfers to Minors Act) option. A UTMA is titled in the child's name and becomes active once they turn 18. UTMAs are available from The Federal Savings Bank.
Overall, you can consider ages 8, 13 and especially 18 as the main milestones for when to start a checking account for your child.
Everyone learns at their own pace. Although you may be able to co-sign a checking account for your child before they're even 10 years old, you'll want to consider if they have a good grasp of:
It's important to feel comfortable with your child's financial acumen. That way, you can rest easier by not having to worry about if they're spending too much or in danger of incurring fees that they didn't know about.
Not all checking accounts are created equal, at least when it comes to being child-appropriate. Before selecting any checking account, pay attention to:
In other words, don't rush it. Take the time to compare the features of different checking accounts and then choose one that's easy for your child to use and for you to keep an eye on.
For more information on how to choose the right account, contact The Federal Savings Bank today.