From flared jeans to flunked tests, most of our adolescent blunders bear little consequence on our adult lives. But some things, like bad money habits, can stick with us for decades to come and aren’t so easy to shake off.
A teen checking account with a debit card can help steer kids in the right direction before spending mistakes become the norm.
Parents likely will have to co-sign, but that gives them the ability to access the account, monitor transactions and advise their children along the way. It also means sharing responsibility for fees and any other consequences, so you’ll want to find a bank or credit union that keeps those to a minimum.
Best interest rate
Alliant Credit Union Free Teen Checking, 0.65% APY
Like most of what it has to offer, Alliant’s teen checking account is a step above the rest. The account is available for kids ages 13 to 17 and comes with a 0.65% annual percentage yield (APY) and no monthly service fees, so long as you enroll in free electronic statements and receive at least one monthly electronic deposit, which can include a transfer from a non-Alliant bank or credit union.
Teen account holders have access to more than 80,000 surcharge-free ATMs. The credit union has great tech tools and makes it easy to become a member — a one-time donation of $10 to a specific charity is all it takes if you don’t otherwise meet the broad eligibility requirements.
What’s the catch, you ask? There really isn’t one. Alliant does charge a $25 non-sufficient funds fee, but you can avoid that by keeping an eye on the available balance.
» MORE: NerdWallet’s best free checking accounts
Best online-only option
Capital One 360 MONEY Account
Capital One 360’s MONEY account comes with a 0.25% APY and more than 40,000 free ATMs. Perhaps best of all, Capital One 360 doesn’t charge an overdraft fee. Instead, customers pay interest at an 11.50% rate on the amount that’s been overdrawn until it’s paid back. The MONEY account is available for those younger than 18.
The online-only bank makes it easy for parents and their children to track spending habits and create automated savings plans, a big plus if you’d like to teach your child smart money management.
» MORE: NerdWallet’s best checking accounts and debit cards
Best brick-and-mortar option
Wells Fargo Teen Checking Account
There may come a day when you want to step foot in an actual bank branch, or at least have the option to. If so, check out Wells Fargo’s Teen Checking account, which is available for those ages 13 to 17.
The bank offers more than 12,500 free ATMs and has more than 6,000 locations across the country, and customers can dodge the $3 monthly service fee by enrolling in online statements. Although Wells Fargo’s online tools are a nice add-on, the account’s overdraft policy, perhaps somewhat surprisingly, is the real selling point: The fee is $15, well below the national median of $34, and you won’t be hit with more than two per day.
Best prepaid card for teens
TD Bank TD Go
TD Bank charges a one-time enrollment fee of $4.95, but there aren’t any monthly service charges after that. Although teens have their own card, they can withdraw only $60 from ATMs per week. Parents can download free online statements if they want to sit down and help their kids budget.
» MORE: NerdWallet’s best prepaid debit cards
Tony Armstrong is a staff writer at NerdWallet, a personal finance website. Email: tony@nerdwallet.com. Twitter: @tonystrongarm
METHODOLOGY
To determine the best teen checking accounts, we took a close look at more than 50 financial institutions: the largest U.S. banks based on assets, debit card volume and Internet search traffic; the nation’s largest credit unions with broad-based membership requirements; and other notable or emerging players in the industry. Only accounts that were explicitly marketed as teen checking accounts were taken into consideration.
Financial institutions surveyed: ableBanking, Alliant Credit Union, Ally Bank, American Express, AmTrust Direct, Associated Bank, Bank5 Connect, Bank of America, Bank of Internet USA, Barclays, BB&T, BBVA Compass, BMO Harris, Boeing Employees Credit Union, Capital One, Charles Schwab Bank, Chase, CIT, Citibank, Citizens Bank, Comerica Bank, Connexus Credit Union, Discover, EverBank, Fidelity, Fifth Third Bank, First Convenience Bank, GoBank, HSBC Bank USA, Huntington Bank, KeyBank, MetaBank, Moven, M&T Bank, MUFG Union Bank, MyCBB, Navy Federal Credit Union, Pentagon Federal Credit Union, PNC, Regions Bank, Santander, Security Service Federal Credit Union, Simple, State Employees’ Credit Union of North Carolina, SunTrust, Synchrony Bank, TD Bank, Union Bank, USAA, U.S. Bank and Wells Fargo.
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