Setting your kids up for success!!! Credit building tips included!
Setting yourself up for financial success is a vital aspect of life. The earlier that one learns the value of saving, investing, and spending responsibly, the better off their life will be when it comes to their long-term financial outlook. This is why providing your children and young people in your life with the tools necessary to get themselves off to a great start financially is one of the best things you can do for them throughout their adolescence.
When minors dive into financial literacy at a young age, the benefits are numerous and can set themselves up for a lifetime of success in money management. There are millions of adults who had never had access to tools to help them understand and improve their financial knowledge, but there are so many great options that credit unions and banks provide, and not to mention all of the resources available via the internet. When young people gain experience with managing their money, the benefits are numerous and oftentimes life-altering.
By helping to create a new generation of financially savvy people, banks, credit unions, and financial experts are providing a much needed service that not only provides benefits to the individual, but to society as a whole. As people learn what it means to save, invest, and earn responsibly, the benefits and rewards of developing these positive habits will endure throughout their entire lives. The key is getting started as soon as possible. Let’s take a look at some of the best credit union and bank account options available to minors in 2021.
Top Credit Unions And banks for minors
Alliant Credit Union https://www.alliantcreditunion.org/
Alliant Credit Union offers a great children’s savings account and is one of the largest credit unions in the country. There are several different types of accounts that Alliant offers for kids, including custodial accounts and 529 plans. Alliant also offers a teen checking account that provides a debit card and provides a higher interest rate than most banks.
Alliant has fully dedicated itself to providing informational materials to help children better understand finances, too. With a variety of offerings to help young people understand borrowing, saving, and spending, Alliant is regularly at the top of the list of best credit unions for kids.
HOW TO JOIN??? Become a member with “Support Foster Care to Success
Justice Federal Credit Union https://www.jfcu.org/Join#eligibility
Justice Federal Credit Union offers three different account options for kids, including a high-yield savings account, the Young Savers savings account, and the Coverdell Education account, which is designed to help pay for your child’s education.
The savings account options require only a five-dollar minimum deposit, while the high-yield savings account requires a minimum of $500. Justice does not offer the same type of educational materials as Alliant, but still provides many account options and resources to help kids get the most out of their first financial accounts.
HOW TO JOIN??? You must be in or related to someone in law enforcement.
Another one of the best options out there is US Alliance Federal Credit Union. There is an excellent array of educational resources and materials to help educate young adults on finances and help them get on the right path towards financial success.
US Alliance will deposit $10 dollars every year into a kids savings account and once they turn 13, their kids savings account is converted to a MyLife Teen checking or savings accounts.
HOW TO JOIN??? This bank is open to the public.
Copper Banking https://www.getcopper.com/
Kids are more tech savvy than ever, and Copper Banking is a primarily mobile banking app that teenagers will find easy to use and convenient. The app provides information and resources to help teens make smart financial decisions. Even better, the Copper debit card is accepted everywhere and allows for free cash withdrawals at over 50,000 ATM’s across the country. Copper features state of the art encryption and data security to ensure peace of mind while banking, too.
HOW TO JOIN??? This bank is open to the public.
Capital One MONEY Teen Checking Account https://www.capitalone.com/bank/
Capital One offers a great option for teens looking to become better with their finances. With Capital One’s MONEY Teen Checking account, there are no fees and no minimum balance requirements. Each account provides the accountholder with a Mastercard debit card and plenty of options for parents to keep an eye on their child’s spending.
HOW TO JOIN??? This bank is open to the public.
Chase High School Checking https://www.chase.com/personal/student-banking/high-school
Chase is one of the most accessible and trusted financial institutions in the entire country and across the world. With Chase banks High School Checking account, kids between 13-17 may open an account along with an adult who will not only be a co-owner, but will have their account linked to provide them with control over their minors account. When a teen turns 19, the account will turn into a full checking account and the adult co-owner will be removed. Only $25 is needed to open the account and teens will gain access to thousands of ATMs and the ability to pay friends and family with Chase QuickPay via Zelle.
HOW TO JOIN??? This bank is open to the public.
Another Option when setting your kids up for success
There is another great way to help teach kids financial responsibility and also build their credit. Adding your child as an authorized user to your credit card is a great way to help get their credit history started and help them become more financially literate.
If you have been following me and my company from the beginning, you would remember this post from 2017.
By the time my son turned 18 he had 5 years of history and here is a screenshot from his 18th birthday.
Now he just turned 19 last month and well, I guess he has been listening to me all the while.
What’s on his profile?
· He is an authorized on 3 credit cards.
· He has a Discover credit card of his own
· He has a Capital one credit card of his own
· He has a Self-lender loan of his own
I typically recommend 3-4 accounts (3 being revolving and 1 installment ) however because he turned 18 right in the beginning of a pandemic and we weren’t able to get his government ID I didn’t want to waste any new applications being denied because we couldn’t send in proof of identification.
Some creditors will request it especially at 18 and 19years old.
However, before you jump on the band wagon there is a few things you need to know.
How AND when you add your child can be a difference of hurting or helping!
Keep in mind that the account that you are adding your children on will reflect the same (good or bad) on their credit reports when they are old enough to generate one.
Two things to stay away from when doing so.
Adding them on cards with High Usage
Adding them on cards with Late payments
If you have accounts that are negative now or was negative in the past, then please do not pass down the negative history to your children.
The act in starting them young does not stop at adding them as authorized users it’s also about educating them along the way and teaching them financial responsibility:
Below are 10 topics you can start to discuss with your children now. Pick a topic you both can research and learn together each month and test each other. Make it a fun family project but also instill how important it is to understand everything revolving these topics.
1. Annual fees/Interest rates
2. Credit Utilization
3. What exactly is a credit limit
4. The difference between a revolving and installment accounts
5. Balance transfer and cash advance pros and cons
6. Benefits and rewards
7. How to read a credit card statement
8. Grace Periods
9. Statement and cut off dates
10. Secured versus unsecured credit
Making sure they understand these core values is a start!
Now below are a list of top creditors and their minimum age they will allow you to add minors, however if you had a credit card prior to today, there is something we call “backdating”
Backdating is when banks report the account open date for your authorize user same as the date you added them.
Let’s say for instance you had a Chase Credit Card since October 2010. You added someone on October 2021.
When the authorized user reviews their credit report, the Chase card will show the open date as of October 2010 versus October 2021, so they inherited 11 years overnight.
The only company we know that does not back date would be American Express.
They no longer backdate and not sure if they will offer that benefit in the near future.
Regardless of your own financial history, setting up the young people in your life for a lifetime of success is something that is attainable and very possible. The earlier a person can understand what it means to be responsible with their money & credit, the better off they and their loved ones will be.
Getting started with a checking and/or savings account may seem like an inconsequential step, but it is one that is a surefire way to start the discussion about what it means to be financially literate and responsible!