Teach your teens how to properly manage a checking account with these seven sensible tips.
Q: Does the word “checking” refer to: (A) check writing or (B) the ability to see your account balance from many different sources?
A: The correct answer is (A), but to many teens who rarely write physical checks, the meaning and the management of money has changed.
1. Decline the overdraft protection.
Designed to protect people from bouncing a check that will ding their credit reports, this is a dangerous option. If you buy a latte with insufficient funds, that $4 coffee suddenly costs $39 thanks to a $35 overdraft protection fee. And it’s charged on every purchase, with no alert to let you know that you’re overdrawn. But even without overdraft protection, you can still pay big bucks for writing a check without the money to back it up. If you have an online account that automatically debits your account, the bank will still charge you a fee for being overdrawn. Moral of this story: Check your account balance daily.
2. Sign up for online banking.
This makes it easy to follow the major lesson of tip No. 1. You can monitor your balance and transactions online using your computer, tablet or phone, so you can know where you stand anywhere, anytime. Most banks and credit unions have free smart phone apps.
3. Leave yourself a cushion.
Commit to leaving at least $200 in your account at all times as a hedge against overdrafts and emergencies.
4. Know when deposits are available.
Sometimes deposits are not immediately available. Be aware of posted cut-off times and holds on checks you deposit. If you need funds from a deposit to be available immediately, then deposit cash instead of the check. You may have to go to the bank listed on the check to cash it and then deposit the cash.
5. Check your balance.
And check it often! If you only use debit cards, the balance should be very accurate. If you also use paper checks, be mindful that once you write it, you should mentally deduct the amount from your account. It helps to use a paper “check register” or an app like Wallet or MINT to keep track.
6. Avoid ATM fees.
Would you pay someone $5 to give you money from your account? Of course not! Then why pay needless ATM fees? Ask if your bank has a fee to use their ATM, and if not, limit yourself to only these machines. If you are in a bind, buy some gum and ask for cash back at the grocery store — You’ll save money and have minty fresh breath!
7. Setup email or text alerts.
Your account may include a free text or email alert service that will let you know about: insufficient funds, your weekly balance amount, when your balance falls below a preset amount, deposits made to your account.
A checking account can be your friend, if you create a “relationship” with it by constantly and consistently checking in. Developing good habits now is the key to having more money — and who doesn’t want that?!
So what happens if you lose your debit card? If you report the card missing before unauthorized use, you are not responsible for any unauthorized transfers. If you report the loss within two business days, you will not be responsible for more than $50. If you don’t report the loss, you could lose everything in your account.