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Summer 2006 – Start Smart: Money Management for Teens
Shopping for a Bank Account That Fits Your Style
How to choose and use a checking or savings product
You probably started saving money years ago in a piggy bank and may now have another favorite place at home to stash your cash. That's fine for smaller bills and coins, but what if you've got checks and large sums of money from birthday gifts or your job? Maybe your parents (or other trusted adults) have been keeping your money in their bank accounts. Now may be a good time to talk with them about opening your own bank account which, if you are under 18, you'll probably have to do with their help.
There are lots of good reasons for opening a checking or savings account at a bank, including these:
One example of a common bank product is a "certificate of deposit," which enables you to earn a higher interest rate the longer you leave the money untouched in the bank, but these accounts usually require a large amount of money (perhaps $1,000 or more) to open. But many banks also offer special savings accounts designed just for young people and can be opened with very little money.
Whether you open a checking or savings account, it pays to be smart in how you choose and use the account. Here are some suggestions:
Shop around for a good deal before you open an account. Banks usually offer several accounts to choose from with different features, fees, interest rates, opening balance requirements and so on. These accounts also may differ significantly from bank to bank. Some banks have special accounts for teens and even younger kids featuring parental controls on withdrawals.
It's usually best to choose an account that takes very little money to start and involves low fees or no fees for having the account. "The fees charged may be more important than any interest you may earn on the account, especially if the account has a small balance," said James Williams, an FDIC Consumer Affairs Specialist.
Keep your account records up to date. Record all transactions — deposits and withdrawals.
Pay attention to your bank statements and immediately report any errors. If your account has a minimum balance requirement, avoid going below it. Your bank may charge you a fee, which would mean less money in your account.
Use the account responsibly. Even a "free" checking account can involve some fees, such as when you use another bank's ATM to withdraw money, so do your best to keep costs down. Also, never share your account numbers, bank cards or passwords with friends or strangers—this could give them access to your money. See more tips for avoiding fraud and theft on Warning: Identity Thieves Target Young People, Too.
Last Updated 08/16/2006