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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Summer 2006 – Start Smart: Money Management for Teens

Shopping for a Bank Account That Fits Your Style

How to choose and use a checking or savings product

Collage with boy, bank, and money

You probably started saving money years ago in a piggy bank and may now have another favorite place at home to stash your cash. That's fine for smaller bills and coins, but what if you've got checks and large sums of money from birthday gifts or your job? Maybe your parents (or other trusted adults) have been keeping your money in their bank accounts. Now may be a good time to talk with them about opening your own bank account which, if you are under 18, you'll probably have to do with their help.

There are lots of good reasons for opening a checking or savings account at a bank, including these:

  • Safety. Money in the bank is better protected against loss or theft than it is at home. And if the bank has financial troubles and goes out of business, your FDIC-insured money will be fully protected (see The FDIC—Who We Are and Why You Should Know About Us).
  • More ways to save. Banks offer several different ways to save money and earn interest, which is what banks pay customers to keep their money in the bank. "It's also less tempting to spend your money if it's in the bank rather than in your room," said Sachie Tanaka, an FDIC Consumer Affairs Specialist.
  • One example of a common bank product is a "certificate of deposit," which enables you to earn a higher interest rate the longer you leave the money untouched in the bank, but these accounts usually require a large amount of money (perhaps $1,000 or more) to open. But many banks also offer special savings accounts designed just for young people and can be opened with very little money.

  • Easy access. Bank customers have different ways to send or receive their money—from going to the bank to writing checks or using the Internet from home. Some banks even have "branches" at schools. If your parents approve, you also may want to start using a debit card to make purchases. It looks like a credit card but you won't pay interest or get into debt because the money is automatically deducted from your bank account.
  • Whether you open a checking or savings account, it pays to be smart in how you choose and use the account. Here are some suggestions:

    Shop around for a good deal before you open an account. Banks usually offer several accounts to choose from with different features, fees, interest rates, opening balance requirements and so on. These accounts also may differ significantly from bank to bank. Some banks have special accounts for teens and even younger kids featuring parental controls on withdrawals.

    It's usually best to choose an account that takes very little money to start and involves low fees or no fees for having the account. "The fees charged may be more important than any interest you may earn on the account, especially if the account has a small balance," said James Williams, an FDIC Consumer Affairs Specialist.

    Keep your account records up to date. Record all transactions — deposits and withdrawals.

    Pay attention to your bank statements and immediately report any errors. If your account has a minimum balance requirement, avoid going below it. Your bank may charge you a fee, which would mean less money in your account.

    Use the account responsibly. Even a "free" checking account can involve some fees, such as when you use another bank's ATM to withdraw money, so do your best to keep costs down. Also, never share your account numbers, bank cards or passwords with friends or strangers—this could give them access to your money. See more tips for avoiding fraud and theft on Warning: Identity Thieves Target Young People, Too.

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    Last Updated 08/16/2006

    communications@fdic.gov