Tuesday, August 4, 2015

Starting Your Own Bank Account - Banking Tips for Teenagers

I started a bank account recently and there's a lot they don't tell you that would have been useful to know. Sometimes it's scary to ask questions when everyone looks like they know what they're doing. Or sometimes when you ask questions, you don't get a straight answer or nobody knows the answer. This guide is mainly for teenagers starting their first bank accounts.

How to start your bank account:
  1. Go to your parent's bank (with a parent if you're under 18).
  2. Set up an appointment to get your bank account.
  3. If you're under 18, ask for a joint account with your parent. If you're 18 or older, ask for an independent account.
  4. The bank person will walk you through starting your account.
  5. Deposit your cash at the ATM or the teller.
Tips:
  • My mom suggests going to the teller to deposit a large sum of money because the ATM could make a mistake with your cash (say, it only puts $50 in your account when you deposited $250) and there would be no proof you actually had $250, and if it comes down to it, who would they believe? You, a money-hungry teenager, or the ATM, a trusted machine?
  • Get the app for your bank. You can see all of your transactions to make sure there's no purchases you didn't make (making you a victim of fraud).
  • When making a deposit through the teller, look for blank deposit slips. You only need to fill these out for teller transactions. How to fill out a bank deposit slip
  • Find the number to call on your bank's website for a lost or stolen card or fraud and put it in your contacts on your phone. That way, if you're out and about and you lose your card, your card gets stolen, or you're a victim of fraud, you can call right away instead of waiting until you get home and locate the phone number to call.
  • The difference between a lost/stolen card and being a victim of fraud is:
    • Fraud: when you still have your physical card but on the app you can see transactions made that you didn't make. This means someone stole your credit card number and/or ATM PIN number.
    • Lost/stolen card: you lost your card or it has been stolen. You no longer have your physical card.
  • The difference between a credit card and a debit card is:
    • Debit card: money is taken out of your account immediately after your purchase.
    • Credit card: money is taken out of your account at the end of the month when you pay your credit card bills.
  • Save your transaction receipts, at least until the transaction shows up on your account (either at the end of the month when you reconcile your credit card bill, or on the app where you can see all of your purchases) so that you have physical proof.
  • Credit or debit?
    • Benefits of debit card:
      • It's harder to go into overdraft so you won't spend money you don't have
      • Better for a fixed budget
      • The money is taken out of your account immediately after a purchase
      • You don't have to remember to pay your credit card bill because there isn't one
      • You can get your card given to you at the bank, whereas for credit cards you have to order one through another company such as Visa or MasterCard.
    • Benefits of credit card:
      • Better for someone who has virtually unlimited money because it's easier to go into overdraft
      • You don't have to pay for things until the end of the month (the money gets taken out of your account at the end of the month when you pay your credit card bill)
      • Better for people who don't have smartphones to help them track purchases because with credit cards, you get billed at the end of the month
      • You can establish a credit score
    • For most teenagers, a debit card is the best option.
  • When people talk about "reconciling" your credit card bill, if you have a debit card you don't need to worry about that. But if you just want to know what people are talking about, it's when you look at all your receipts (from purchases and bank transactions like depositing or withdrawing money) and make sure they match up with what you've been billed for.
  • Overdraft
    • Overdraft is when you spend money you don't have. Like when you go into the negatives with your bank account (like if you have $-5.00) or when you go "into the red."
    • For debit cards, some banks won't let you go into overdraft. They'll just decline your card. Some banks have overdraft protection, that takes money out of a linked account if you don't have enough money in your main checking account. Either way, there are overdraft fees so beware! Always have enough money in your checking account that's linked to your card!
  • Checking account or savings account?
    • Your checking account is the account that money is taken out of when you swipe your card or when you withdraw money from the ATM. It's more likely to be the target of fraud than a savings accounts.
    • Your savings account is the account that is really meant to store money in and not take anything out of. You can't get a debit/credit/ATM card linked to a savings account, but savings accounts are usually not the target of fraud.
    • My banker recommended that I keep $500 in my checking account for spending, and the rest of my money in my savings account. You will need both a checking account and a savings account if you want a debit or credit card. You can transfer money between accounts on the app.
  • Your debit card doubles as your ATM card.
  • You will need to activate your card online (not on the app) at home before you can use it. You can't start using it the minute you obtain it.
  • After a day of using your card, I recommend checking the app to make sure there's no transactions you didn't make and all the transactions you made show up.
  • ATMs take up to 40 bills.
  • Make sure to go to the ATM for your bank. There's usually a $2-5 fee for using a different ATM.
  • Going on vacation? Notify your bank online before using your card internationally. They may cancel your card if they see activity in a foreign country, thinking you're a victim of fraud.
  • There's lots of hidden fees, so hop on your bank's website and look around.
  • You may be exempt from some fees if you're under a certain age.
  • To deposit coins (perhaps from your childhood piggy bank), go up to the teller and ask how to deposit change. The ATM doesn't take change. At my bank, they gave me a bunch of rolls for free and asked me to roll them, but some banks will take your coins as is and put them in the coin counter and later add them to your account.
  • Memorize your ATM PIN number and if possible, your online account ID and password too.
  • Don't put your bank account information in your phone so you don't have to memorize it! If your phone gets stolen or a friend borrows your phone, they have access to all of your money. I suggest storing the information at home in a safe and discrete place, should you ever forget your ATM PIN, ID, or password.
  • Minors can't write checks.
  • How do I swipe my card - which way? I actually could not figure this out myself, as I wasn't sure if the machines needed my card's embossed number or the magnetic strip. Turns out it's the magnetic strip.  "Almost always position the card with the stripe facing the bulkiest (thickest) part of the machine. For ATMs orient the card as per the illustration near the slot (usually stripe down asnd to the right; often that side of the slot is illuminated from within)." (source)

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