Berkeley Parents Network: Credit Cards & Banking for Teens

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Credit Cards & Banking for Teens

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Checking and ATM card for 14-year-old
Caution about checking accounts for teens
Credit card for teen going to college in the fall
Credit card for 16-year-old?
More advice about Teens & Money
More advice about Credit Cards
More advice about Banks & Banking

Checking and ATM card for 14-year-old

Sept 2006

Has anyone found a bank that will give a 14 year old a checking account with a debit/ATM card for low or no fee? WaMu gave my 16 year old such an account, but will not approve one for my 14 year old. This is for depositing his bi-monthly allowance/budget, having him be responsible for the deposit and management of the $, mostly with the ATM card. Thanks Sarah

My 14-year-old son was depositing money in his savings account at Wells Fargo on Solano Avenue, and the clerk asked if he wanted a checking account with a debit/ATM card attached. It's free and has worked out very well for him. His savings account card only allows him to deposit/withdraw money, but with the check card he can make purchases. He can also transfer money between the two accounts online Maureen

We've had a savings account at Wells Fargo for several years for my 15 year old. It was set up by us, since he's a minor, but we were able to get him an ATM card to deposit and withdraw money. The catch is that the number of transactions, especially withdrawals, are limited since it is a free savings account. I'd think you could set up some type of similar account, even if there was a modest fee. Banker teen

Over the summer, my 14 yo opened an account at BANK OF AMERICA, that includes an ATM card Anon

Regarding both teen checking accounts and allowance. Check out the Bank of America. They have an account for teenagers that comes with an ATM card. You may have to have your name on the account also. We've done that for all of our children when they reached high school.

By the way, regarding allowance. We negotiated a deal with the kids. They are paid a sum weekly, one week's allowance goes to savings, one goes to checking. They can take money out of savings if they want to, but are more likely to leave what's already there for long term goals. b of a customer

A checking account (and by association a debit card) requires that the holder be of legal contract age (18). Wherever you go, you will probably be required to co-sign.

That being said I wanted to put in a pitch for Mechanics Bank. I bank at the North Berkeley/Solano branch and find them to be the nicest, most personable group of COMMUNITY and community-minded bankers. They saved my friend's 80+ year old father from being scammed by someone who ''just needed him to get some cash...'' because they knew him and knew that it was unusual for him to be asking for that much cash.

If the parent qualifies for free or low-cost checking they will pass this on to the child. Worth investigating
Support our local banks

I second the recommendation of Mechanics Bank. We use the one on the Arlington and have always received wonderful help from the bank manager - Xavier Abrams. Both of our kids have checking, savings and debit cards that work for all purchases just like a credit card except car rental which they can't do anyway. Online banking and bill paying work well and we can monitor their accounts with their permission. And if they ever had a problem, they just called Xavier directly. Small, local and personal. www.mechbank.com

The best thing about them is that they refund ALL ATM fees so both kids have kept the same bank through college, one in Portland and one at Mt. Holyoke. They even refund fees out of the country as well. They both signed up for direct deposit of their work study checks which worked flawlessly.

It was nice to get to campus and not have to deal with all the ''free'' offers from VERY agressive banks wanting to hook your child with a credit card. Just like the cigarette companies, they know if they hook them early, they have customers for life (with debt.) Happy Mechanics Bank customer

Caution about checking accounts for teens

August 2005

Re: Helping teen manage her money
We converted my daughter's savings account to a ''college checking account'' (at Wells Fargo, with my name included since she isn't 18 yet). We did this so she could make an unlimited number of ATM transactions per month without fee. The only thing was that she was able to overdraw the account. She withdrew $20 from non-ATM (i.e., store) machines and was charged the $1.50 store fee, the $2 non- network fee by WF, $22 overdraft fee by WF, and got a $20 bill. (Yes, that's right, $45.50, of which she got $20) She did this FIVE TIMES. WF also charged $5 per day for each business day the account remained overdrawn. I was gone for a few days and came back to notices from WF re: all of this. I closed the account. Because she was getting the money NOT directly from WF, there was no way for the machine to ''know'' that she had no funds. Obviously, she knew she didn't have funds, but hey, if the machine gives it to you, maybe it's true! Buyer beware!! Duped and disappointed mom

My son had a similar experience with an ATM card and with each overdrawn fee the charge goes higher and higher. He called Bank of America and they did lower the charges for him that one time.

ATM cards are misleading because the kids think that if they can get money or make charges that they have money in the account. My son had mostly small charges ranging from 25 cents to a few dollars with overdraft charges of up to $59 per charge. Judy

My son was great with his checking account since age 12 and my credit cards in his name since 13. At 16 he could no longer handle money, with many charges that he wasn't paying (me). At 17, Wells Fargo opened a college account for him *without* my involvement. I have no idea how he's dealing with it now and fear he'll start out with a negative credit rating. I agree, beware the college accounts. Dana

Credit card for teen going to college in the fall

July 2000

My daughter is entering Barnard College in the Fall. I want her to have a credit card. She has had a debit card from Kaiperm but I don't think that will work in Manhattan. We get lots of credit card announcements in the mail. Has anyone had experience with Capital One? or any others? I'd appreciate the advice.
Jan

I was poking around at the Citibank web site yesterday and noticed they have several "college" cards.

My son has had cards on my accounts since he was 8 because he has travelled internationally by himself. Every few months he gets a pre-approved platinum card application, so I guess he's building a credit rating, even through my card. I'm thinking this will make it easy for him to get a card of his own when he turns 18. (Once I sent in one of these preapproved applications, putting in his correct age and annual income of $500. I got a huffy response back saying, "We don't issue cards to anyone under 18!") Dana

If KaiPerm's Debit Card is the same as all the other Debit Cards I've ever seen, it will work just fine on the other side of the country--they are all done through the VISA network, which is worldwide. The only problem will be making deposits to the underlying checking account. But you can do "bank by mail" to solve that one, if you want. Ask for forms/envelopes at your branch before she leaves. An alternative would be for her to get a new checking account at another bank that has branches in her new town, and get a debit card through them. Personally, I agree with the general wisdom on the web page that credit cards are the quickest way for folks to get saddled with debt they cannot manage. If a debit card will do, she should probably stick with that for a while. Dawn

I turned 18 my Senior year at BHS, and in March got a CapitalOne (www.capitalone.com) student Visa card. True, at first the interest rate was very high (19.99%), but there was no annual fee and no minimum finance charge. Also, the credit limit was only $1000, but I was not employed either, and spending more than this would not have been good for me. That said, it has been very liberating to have, and probably easier on my parents financially, since I don't ask them for their cards anymore...Also, in the last 5 months I've had my card stolen twice, and it took only a few days to get a replacement card. Also, because I've always piad my bill in full, they upped my limit to $2000 and when I called and asked, they lowered my APR to 9.99%. Not bad. I have been satisfied to this point. Oh - and I use their website to electronically pay my bill directly from my savings account so I don't have to worry about mail delays. Ben

Credit card for 16-year-old?

Dec 1999

Does anyone have experience with credit cards for teens? My 16 year old has a job and a bank account with an ATM card, but he needs a way to deal with larger amounts of money than by cash. A checking account would not be practical because he doesn't have a driver's license yet for ID. He is going on a ski trip next month, and will need about $250 for his expenses. We got a solicitation for a credit card from Capitol One, a company about which I vaguely remember hearing negative reports. We would have to co-sign for the card, of course, but he has shown himself to be very responsible with money so that doesn't worry us. I'd appreciate any info on Capitol One, or any other suggestions.

We have two teenage daughters to whom we have given credit cards--one at age 14 and one at 15. With specific rules, they have used them responsibly and it has been a great help. Our rules are: 1) they only use them with prior permission (i.e. tell me in advance they are going shopping for a needed article of clothing, something they need for school, etc., and set monetary limits for the purchase), and 2) they must hand over all receipts.

Two ways we have gotten credit cards: one company allowed us to add a child to our account as an additional card holder. This got around the problem of finding a company that would extend credit to a minor. HOWEVER, the down side was that when my daughter lost her wallet, we had to cancel all our cards on the account so we were all inconvenienced until new cards arrived. With the second child we obtained an account from a different company so that if a loss/theft occurs, only she will be inconvenienced. Also, it makes accountability easier, as I know that any purchases made on that card belong to her.

The lost wallet also taught us another lesson. We made a copy of every card and ID in each person's wallet. Now if anyone in the family loses their wallet, we will know exactly what was in it that needs to be cancelled and/or replaced. Make copies of the back sides of credit cards because that is often where the phone numbers are for reporting stolen/lost cards.
Lucy

To the parent wondering about a teen credit card: I remember at a King PTA meeting last year a financial counselor, speaking on financing education, said that the largest debt that students graduate from college with is credit card debt. That being said, even though yours is responsible, I'd go for the checking account. You can solve the ID problem by getting him a California ID at the DMV. He just needs to take a birth certificate and social security card...My two cents.

I called my credit card company and asked them to add my daughter's name and send a card for her. It was very simple. Anything she buys shows up on my bill. I made some rules before I gave her the card. That was a few months ago. Seems to be working out fine.
Sunsol

We started my son out with a card on one of our accounts when he began driving at 16. In his second year of college he received many solicitations for credit cards in his own name with fairly low credit limits and all sorts of perks-- airline discounts, sports bags, etc. He picked one and uses it for his own incedentals and takes care of the bill himself. He still uses the one linked to our account to buy his books and purchase plane tickets so we get the bonus mileage for our account. We knew he'd be responsible and we've never had a single problem.

my daughters both were on our credit cards since age 14 and it worked very well. We can tell which postings are theirs. Wells Fargo has a credit card that the amount is deducted automatically each month from the account and that worked well for my college age daughter. The groundrule that the account is to be paid off each month set a good habit in place. I also have let them write checks when they need to (it was a surprise to me that their signatures will work on the checks), and this has never been abused (I always balance the checkbook so I would know). I think having practice with money management before college is very important. The worst thing that has happened is that once or twice an entry wasn't made into the register, but I caught it within a few days.

I got my daughter and son their own checking and savings account at Kaiperm Credit Union when they were 14. We are members of Kaiser HMO and they give FREE checking accounts to youth. My daughter who is now a senior also has an ATM card that doubles as a Visa card. She would complain some times when a store on Telegraph did not want to take her check but usually they did with just her Student ID card before she had a driver's license. I haven't got my son a card because he never wants to spend his money only invest it. My daughter is very responsible and I think having teens learn about writing a check and what to do with Birthday money - savings or checking accounts... Is very useful!!
Jan

Regarding the credit card for teens: AAA on University Ave. has two new cards that are essentially ATM cards that you can put a prescribed amount of money on for student's use. One is called "Member One" and the other is called "Member Cash." My daughter used the AAA Member Cash card for her month-long trip in Germany last summer. It can be used th access money from over 480,000 ATMs in 212 countries around the world. You can choose the amount you want to put on it and add more while they are traveling if you want. The cards have a PIN number for security and are not attached to any bank account or credit account. The Member One card is designed to be used for domestic travel, everyday spending, like book-buying college, and gift-giving. Check it out!

I had a Capitol One Visa for a while. I didn't like it much, and cancelled. But some of the reasons I didn't like it might actually be *desirable* in a card for a teen (for teaching purposes)! 1) They tend to have pretty high interest rates 2) They have a very short or non-existent grace period. I recall one time where I paid the bill off on time, according to the due-date on their invoice. But the next month I had to pay interest anyway, because I hadn't paid the charge off before the 25 days they give *from the date of purchase*. 3) They are very strict with the payment date--if your check arrives even one day after the date due you WILL pay a late fee. 4) I seem to remember that I didn't like they way they calculated interest. I don't remember if they use "two cycle billing" or not--they might. (I know that First USA uses this method). Two-cycle billing results in you paying interest on the same charge for two months rather than one. It's insidious, but somehow not illegal.

All in all, not a pleasant card to have, IMO. But it might be a good card to train a teen with. If they can manage this one, they can probably manage any other card they would get in the future! Good luck, Dawn

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