It pays to keep an eye on bank fees for kids

FINANCIAL institutions love signing up children to their first bank account in the hope they will stay with them for life – and many never switch.

This month’s Productivity Commission report into competition in the financial services industry found half of all Australians stick with banks for life. But analysis by RateCity shows youngsters need to choose their first bank account carefully. It showed while teen accounts don’t get hit by monthly account-keeping fees, there are other nasty charges than can catch them out.

Many slug young customers up to $5 for using ATMs overseas ande overseas transaction fees up to 3 per cent.

RateCity’s spokeswoman, Sally Tindall, said teens need to make sure they avoid these nasty charges.

“It’s often the first time they are choosing a banking product and that’s a really big deal,’’ she said. “So check the terms and conditions for hidden fees.”

Most of the young bank accounts require the customer to be at least 12 years old and some end once they reach their 20s. This means customers will have to switch accounts.

ING’s head of retail banking, Melanie Evans, said new research commissioned by the bank quizzed 600 teens aged 1318 and found many were financially responsible.

“About 29 per cent are saving for a rainy day, which is incredibly responsible and conservative,’’ she said. The research also showed 42 per cent of young Australians have some form of employment.”