My son is 18, just graduated, and is going to college. I got him his first debit card two years ago and I consider this one of the best ways to teach a child about personal finance. The most important features with debit cards are access to ATMs and online banking as well as the charges connected with both. This way he can learn to manage and track his own money. I deposit his weekly allowance into the account and he can then go online, confirm the balance, and plan his expenses accordingly. I also encourage him to use his card instead of cash to both accurately track his expenses and avoid being the victim of a crime, God forbid.

Here are a few guidelines to look for when choosing a bank:

• Focus on the simplest banking services and don’t be seduced by add-ons like investment services or insurance planning. My grandfather used to say that you can’t have your ass in two saddles and ride them both well. That is especially true of banks these days, as we can all see the mess they make when they dabble in things like sophisticated investment derivatives! If you or your child wants to invest or buy insurance, deal with specialists. So look for a bank that offers a simple menu of consumer services and charges little or nothing for them. Good bankers know that their cheapest source of funds for making loans is the deposits of consumers into checking accounts where they pay no interest. Therefore there is no need for them to charge for services and if your bank does, shop around.
• Check for overdraft protection. When kids use debit cards and checks for the first time, they are going to make mistakes. It is human nature. The thing is that you don’t want to be charged up the nose for those mistakes! Overdraft charges are the sneakiest of banking fees and the most likely to occur with kids. It is because of this, many banks offer overdraft protection or low charges or both. Fees can vary wildly, so be sure to ask. You can usually get one or two fees waived every so often, if you’re willing to explain the situation and you have the patience to wait in line or on the phone to speak with a representative. Also, see if the bank you are considering offers the option of setting up a savings account that can automatically transfer the amount of the overdraft from your account into your kids’ checking account to cover the shortage without a fee. Then you can leave an emergency fund on deposit, usually only a small amount, to fix the errors and as you will have online access as well, you can see right away if your child is abusing the privilege and act accordingly.
• Make sure that the bank protects against identity theft and fraud and explicitly protects you from unauthorized charges in the event the debit card or number falls into the wrong hands. This is very important!
• Use the phone! Don’t be seduced by sexy ads. For example, Wells Fargo advertises aggressively for consumer banking but in a recent survey rated near the bottom in customer satisfaction. Call around, ask friends and family, and make an informed choice.
• I am not a big fan of worrying about age in regard to banking other than having online access to viewing my child’s account to keep tabs and spot excessive or worrisome spending. For example, if I saw too many charges at the local micro-brewery that would run up the red flag! As the old Russian saying goes, trust but verify! As we age, our basic banking needs don’t really change unless or until we go into business for ourselves. Then banking needs are based more upon credit access and service, rather than checking account features, but this topic alone is another discussion for another article I suppose.