Teaching kids the value of money is important and starting them with a savings account is a good way to teach them about interest. When they start to work or receive pocket money, a checking account is the next step.
Most banks have specific checking accounts in a simplified version for young people who are just starting their financial lives. They will restrict services like internet banking, debit cards and overdrafts until a certain age, but youth bank accounts can also benefit from special discounts and useful financial learning tools.
Most people need a basic account for incoming and outgoing money. These accounts are suitable for day-to-day banking activities and can be offered at bank branches, over the phone, online and by mail. You can show your child how to check their bank balance, review transactions, transfer money between accounts (if they already have a savings account), pay bills, and set up automatic standing orders for regular payments .
To save money
The great thing about internet banking is that you can have two accounts and link them together which makes it easy for you to transfer money to your savings account and enjoy the interest you can earn with the accounts. savings as long as you don’t spend that money!
You can save money with checking accounts, but savings accounts are better because they offer a higher amount of interest to be earned, and often because they are separate from your money account. expense ”, you are more likely to leave the money there and leave it grow on its own by putting a small percentage of your pocket money or your salary each week.
There are many different savings accounts available at each bank, and they often require a minimum deposit to open the account.
Borrow money with an overdraft
Your account may have an overdraft which will allow you to withdraw additional money from your account. Suppose you have $ 6 left and you use your card in a store to pay $ 10 for products. Your account will have a negative amount (- € 4) and you will have an interest-free period during which you can repay this money. If you exceed the overdraft amount or beyond the interest-free period, you will be charged bank charges.
You also want to have some control over borrowing money. You are offered low limit credit cards with some youth and student accounts, but that doesn’t mean you have to get one. Credit cards can get expensive if you don’t pay them off. These are cards with a fixed limit that you can spend now and pay for later. You receive a monthly invoice asking you to offset or pay a minimum payment for the account. People start to get into trouble when they can’t pay off their card because they have borrowed too much. This is where you need to be in control of your finances.
NB Since you are a young person or a student with no assets, you are unlikely to have a very good credit history, so banks will not give you a card with a high limit. If you have been able to prove that you can pay regular payments such as monthly phone bills, your credit report may be higher. It’s a good idea to check just in case.
Prepaid credit cards
If you need a credit card to buy things online and in stores, prepaid cards are a great alternative. It’s like buying phone credit – you put money on the card and once the credit goes to zero you can’t use the card anymore. There are many different types and you can choose them depending on what is most important. Would you prefer to have monthly fees or charges when you reload the card? It’s about finding out what’s best for you.
It is better not to get involved in loans at such a young age. Borrowing from mom and dad’s bank is also a no-no. Work hard, save your money, and invest it. Read the slippery slope of the loan here. We’ll tell you how, but make sure you budget to make sure you can pay the money back without having to pay huge interest or go into heavy debt.