Bank service

All-in-one mobile banking service for teens

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This can seem like a daunting task for parents who want to put their children on the path to financial success. You may want to build your child’s credit score and open a bank account for them, but you will need to go to a bank and make your child an authorized user on your credit card to do so. It’s here that Stage, a new mobile banking service designed for teens, is coming.

Step is an all-in-one bank account, credit card, and money management app. Founders CJ MacDonald and Alexey Kalinichenko created Step with the intention of serving teens who were just starting their financial journey and opening their first bank account or credit card.

Step has caught the attention of many famous investors and influencers such as TikTok superstar Charli D’Amelio, actors Justin Timberlake and Will Smith, and football player Eli Manning.

Select explores how Step works and some of the pros and cons of this all-in-one banking service.

What is Step and how does Step work?

Step is a mobile banking service for children aged 13-18. It is a completely free service that provides users with a bank account and Visa Step card. MacDonald explains that Step is label resistant, it is not a checking or savings account, and the Visa Step Card is not a credit card or debit card.

“We sort of combine solutions … where they [customers] have a deposit account where they keep all of their money and then they have a secure spending card that they can [use to] shop wherever Visa is accepted, ”said MacDonald.

The Stage card

First of all, the Visa Step card is a type of secure card. However, it is not a debit card or a secure credit card. A traditional secured credit card is a card intended to help people with bad credit or no credit build their credit score. Secure credit cards work the same as debit cards, but unlike a debit card, they can help improve your credit score.

With the Visa Step card, teens can only spend up to the amount deposited into their Step bank account. If your account has $ 100, you can only spend $ 100. Unlike traditional secured credit cards, the Visa Step card does not require you to make monthly payments on your purchases, as all the money you spend with the card must be saved to your Step account. This means that you can build your credit history without having to make monthly payments.

If, however, you are 18 or older and want to earn rewards on your spending while increasing your credit rating, a card like the Visa® Petal® 2 “Cash Back, No Fee” credit card or the Discover it® secure credit card might be a better option for you. The Petal 2 card is an alternative to a secure card – it requires no credit history, has no fees, and requires no deposit. Cardholders start by getting 1% cash back on qualifying purchases immediately and if you make 12 monthly payments on time you can earn up to 1.5% cash back on qualifying purchases.

Because the Discover it® Secure Credit Card is a secure card, you must be at least 18 years of age to be approved. You’ll need to make a down payment equal to your credit limit, but after eight months you have the option of switching to an unsecured credit card if you’ve made your payments on time and in full. You’ll get 2% cash back at gas stations and restaurants up to $ 1,000 in combined purchases each quarter and 1% cash back on all other purchases with this card.

Discover it® secure credit card

On the secure Discover site

  • Awards

    Earn 2% Cash Back at gas stations and restaurants up to $ 1,000 in combined purchases each quarter. Plus, get unlimited 1% cash back on all other purchases – automatically.

  • Welcome bonus

    Discover will match all of the cash back rewards you’ve earned at the end of your first year

  • Annual subscription

  • Intro APR

  • Regular APR

  • Balance transfer fees

    3% introductory balance transfer fee, up to 5% fee on future balance transfers (see conditions) *

  • Foreign transaction fees

  • Credit needed

The Step bank account

To open a Step account, teens under 18 will need a sponsor over 18. Sponsors can monitor their teen’s spending, add money to the account, and manage or freeze a teen’s card. You can technically open an account with Step if you are under 18, but you will need a sponsor, such as a parent or legal guardian over 18, to add money to your account or to start using Visa Step Card.

You can transfer money to your teen’s bank account from another bank account, a debit card, Venmo, Cash App, and PayPal. There is no way to directly deposit cash or checks to a Step bank account, but you can receive direct deposits to an account.

Step also offers functionality similar to Venmo’s peer-to-peer payment tool that allows cardholders to instantly send money to others with a Step account. However, you cannot write checks from a Step bank account.

The Step bank account offers no interest on deposits and is FDIC insured up to $ 250,000. This means that it is probably not a great choice for parents or teens who are planning to store a lot of cash due to the lack of interest offered. A high yield savings account is a better option for saving money that you are not using for your regular needs and will earn you more.

The other important element of Step is the app, which is available in the Apple Store and the Google play store. The app gives users insight into their own spending habits, making it easier to budget and understand which spending categories they can cut.

Costs

Step is a completely free service: there is no minimum deposit, no ATM access fee, no monthly fee, no overdraft fee and no interest rate. However, if you want to withdraw money from an ATM, you must use one of the 35,000 ATMs in Step’s network to avoid ATM fees. Step earns money like most credit cards, with interchange fees every time someone uses a Step card.

Final result

Step is a good choice for teens who are getting their first credit card and / or bank account. Since Step charges no interest on credit cards, has no fees, and requires no minimum deposit, it’s easy for teens to start building credit and learn more about it. expenses, budgeting and finances. Plus, since it’s an all-in-one service, parents won’t have to open a separate checking and savings account for their teen and can build their teen’s credit without worrying. monthly credit card payments.

One downside to Step is the lack of interest on deposits. If you plan to use your Step account like you would use a checking account, this is probably a good choice. If, however, you are looking to save a lot of money, it is better to invest it in an index fund or put it in a high yield savings account.

Petal 2 Visa credit card issued by WebBank, FDIC member.

For prices and fees for Discover it® Secured, click on here.

Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.

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