By Michele Ford, Senior Research Analyst
With back-to-school season in full swing across the country, kids are likely bringing home school supply lists, becoming familiar with their new teachers and classrooms, and learning exciting subjects. At the same time, some parents may be concerned about a subject that is not always taught in elementary and secondary classrooms: financial literacy for children, teens, and young adults. Fortunately, many banks and credit unions offer banking products to bridge that gap and teach young people good money habits. In this month’s commentary, we will discuss banking products for children and young adults by reviewing the following topics: 1) new account incentives, 2) promotional events, 3) parental guidance, and 4) smart money skills. There is also a special section on the Greenlight app.
New Account Incentives
An important step in achieving financial literacy for youth is opening an account and keeping track of money collected from allowances, gifts, part-time jobs, etc. This year, some of the incentives for opening a youth-based account included $50 and no monthly fee with MidFlorida Credit Union’s Absolutely Free Student Checking account. Chase extended a $100 bonus for new High School Checking customers who made five qualifying transactions in the first 60 days. Qualifying activities making a debit transaction or using Zelle to send or receive money. First Community Credit Union targeted Class of 2024 graduates with its “Grad Pack” offer. New graduates who opened a free checking account, savings account, and rewards credit card could earn a $100 bonus. During National Youth Week in May, Navy Federal Credit Union launched a digital marketing campaign offering limited-time incentives for opening new minor memberships ($25 bonus) and prepaid cards ($10 bonus). No monthly fees and not requiring a minimum balance are other commonly marketed benefits.
Because welcome bonuses aren’t as common for the lower balances held by younger account holders, financial institutions often rely on promotional events or key benefits to raise awareness.
Promotional Events
Financial institutions can create community buzz and establish new youth relationships through promotional events. Earlier this year, Advanz Credit Union sponsored a coloring contest for the following age groups: 0-5 years, 6-9 years, and 10-12 years. One winner from each age group received a $100 deposit to their Cadet Savers Account. Another example came from Golden 1 Credit Union, which extended a prize of up to $500 in its summer sweepstakes. To qualify, applicants needed to open either a Youth Savings Account or a Student Checking Account. Winners could claim up to $500 in matching funds for their accounts. Other notable contests included a trip to Hawaii for moving at least $10 to a child’s savings account (Greenlight) and a chance to win up to $20,000 for college tuition by participating in a gamified financial education program (U.S. bank in partnership with the Zogo app).
Parental Guidance
Through youth accounts, financial institutions can use entry-level products to establish early relationships with the next generation of credit card customers, homebuyers, and borrowers. However, parents are usually still involved with the child’s money management; in fact, parents are typically the primary recipients of the marketing campaigns. For these reasons, parental controls have become a popular benefit of youth accounts. USAA recently released an email to promote Parental Controls, Easy Money Transfers, a Physical Debit Card, and No Monthly Service fees on youth accounts. Notably, Apple offers parents the ability to send money instantly through a conversation in Messages to kids on the Apple Cash Family account.
Spotlight On: Greenlight
Greenlight, which is both an app and a debit card for kids and teens, has been a top competitor aimed at serving the digital natives in Generation Z (currently between the ages of 13 and 28) and Generation Alpha. Greenlight promotes its product as a debit card for kids, managed by parents. Greenlight’s marketing strategy is to build trust and confidence with customers by using messaging like “loved by more than 2 million parents and kids.” Since Greenlight is a paid subscription service with three pricing options, the company often markets a free month for using the platform. In a recent email campaign, the tagline read, “Ever wonder how to teach your kids about money in a digital world?” While Greenlight steadily markets its products directly to prospective customers, many financial institutions have partnered with the brand. Access to Greenlight is offered as an added perk to the relationship. For example, PSECU members could enjoy a free monthly subscription to Greenlight for their kids. In addition, customers who opened a new U.S. Bank Smartly Checking account and completed qualifying activities were eligible for complimentary access to Greenlight (promoted in both direct mail and email).
Smart Money Skills
To build a foundation for a lifetime of customer loyalty, the product or service must exceed customer expectations. Parents are looking for seamless setup and easy-to-use controls, while teens are looking for a digital experience (the ability to easily move funds, track spending habits, and establish savings goals all through a mobile app). In August 2024, Capital One announced upcoming changes to its MONEY Teen Checking account in October 2024, including the ability for account holders who are at least 13 years old to add cash in-store at participating Walgreens and CVS stores. OneAZ Credit Union is hosting Teen Tuesdays in its branches during August to help parents and teens learn about available products and discuss money management topics. Notably, Zogo, a platform that uses gamification to teach financial literacy, is utilized by financial institutions to offer a robust educational tool to their customer base. Users can earn points for completing modules or quizzes, which can be redeemed for gift cards or charitable donations.
Not only can youth banking products and money management tools assist young people in becoming financially literate, banks and credit unions can benefit by establishing early relationships and showing involvement in the community.