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7 Financial Tips for Teenagers: Learning to Avoid Hidden Fees

Recently, my son came home from an outing with friends, incensed that he had received a parking ticket. I’ll bet most parents can imagine the ensuing diatribe. It wasn’t his fault. The signs weren’t clearly marked. He shouldn’t have to pay a fine.

He was so sure that the fee was undeserved that he intended to have the last word—by not paying it.

Whoa, there, Mr. Right. A conversation quickly followed: Not paying was not an option, and the fee would continue to compound, turning his $44 oopsie into a big-bucks blight.

That got me thinking about other fees, costs, and even purchases that teens might be unaware of until it’s too late. We identified some common ones and went to the experts to get some financial tips for teenagers on what they should know.

7 Easy-to-Avoid Fees

1. Data and Cell Phone Fees

A 2015 study found that 25 percent of AT&T customers and 20 percent of Verizon customers said they had paid an overage charge within the past six months. We’re guessing teenagers were responsible for some of that.

  • SET AN ALERT: The best way to avoid these dreaded fees is by setting an alert on your phone through your wireless carrier, says Andrea Woroch, consumer and money-saving expert.
  • TRACK USAGE: You can also show your teenager how to track data usage using the built-in features on his iPhone or Android phone. Or try free apps like Onavo Count and 3GWatchdog.
  • USE DATA-FREE APPS: Burned through the limit? Check out data-free texting apps like Chomp SMS for Android and TextFree for iPhone.
  • FIND FREE WI-FI: To avoid pricey data-overage fees when traveling, turn off pop-up notifications and use the free Wi-Fi Finder app to track down local hotspots or turn on your phone’s Wi-Fi locator to find a free Internet connection.
  • GET A PRE-PAID PLAN: Another option is to get your teen a prepaid wireless plan, says Kyle James, founder of Rather-Be-Shopping.com, a website that specializes in frugal living and personal finance. Among his financial tips for teenagers: check out T-Mobile’s $30 a month plan. “The unlimited web and text is perfect for teens, and since they usually don’t talk that much, the 100-minute monthly talk limit is no biggie.”

2. Checking Account Overdraft Fees

  • OVERDRAFT: When it comes to financial tips for teenager, this one can save them some serious cash. Many teens have been surprised to learn they can still write checks even when their accounts are empty. “Teens usually accrue overdraft fees for overdrawing small sums, often less than $20, so it’s a smart financial habit to routinely keep at least $100 in your checking account,” says James.
  • PUT FAIL SAFES IN PLACE: It’s also smart to balance your checkbook, but teenagers aren’t always diligent in that department. So, it can’t hurt to help your teen put some fail-safes in place. Many banks offer an alert if a balance drops below a certain dollar amount, Woroch says. Among Woroch’s key financial tips for teenagers: ask your bank about overdraft protection, where funds from another savings account—or a credit card—are automatically transferred to cover overdrafts for a smaller fee than a bounced check. You may also have the option of disabling ATM withdrawals that would cause overdrafts.

3. Credit Card Late Fees

  • SET UP AUTOMATED PAYMENT AND/OR ALERTS: “Check to see if your bank offers an automatic payment option that links your credit card to your bank account. Often you can set it up to pay full balance, minimum payment, or fixed amount,” says James. Otherwise, many cards allow you to set up alerts via email or text message when the payment date is approaching, says Woroch.
  • TEACH SMART CREDIT CARD USE: It’s also smart to avoid opening too many cards in the first place. “Too many cards can lead to confusion and cause you to miss payments. So don’t open up a store credit card to take advantage of a discount. It’s easier for teens to manage just one credit card,” she says.
  • PAY IN TOTAL EVERY MONTH: Naturally, any discussion of credit cards should include a lesson on why you should pay off your card each month to avoid getting stuck in a nasty interest-rate cycle. If they do miss a payment, teens should know they can request a courtesy for the late fee to be removed if they have a strong history of on-time payments.

4. Fees for Using Credit Cards

Your teen might not know that some apps, like digital wallet Venmo, charge a fee if you connect it to a credit card. “Link your bank account and use debit or cash whenever possible to avoid those fees,” says Woroch.

5. Accidental In-App Purchases

In-app purchases can be sneaky. Jennifer Nieting learned this the hard way when her son Joe racked up $300 in in-app purchases on a popular game. He was able to get reimbursed by the app maker for his one-time purchase mistake. “But don’t make a habit of it,” Woroch advises. You can set restrictions for in-app purchases, including making them password-protected or completely disabling purchasing ability.

6. “Trial” Periods That Go On and On

Try Netflix or GameFly for free? Sure, why not? The problem is that most teens will likely forget to cancel and get billed unnecessarily. “Set a calendar alert on your smartphone for the day before your trial ends so you can call and cancel,” James says. Also remind your teen that “30 days” is not necessarily a month. My son had a date of Nov. 30 in his mind to cancel something he’d bought on Oct. 30, but since there are 31 days in October, he was one day over.

7. Shipping Fees

While most online retailers have some type of free shipping offer, many need to be accessed using a coupon code. And teens might just assume it is automatically applied. Search sites like FreeShipping.org or CouponSherpa.com to access discounts and free shipping. In fact, here’s one this line up of financial tips for teenagers: look for coupons for discounts in addition to free shipping. Oftentimes, you’ll find one for the site you’re shopping on by googling “[name of site] and coupon”.

Cathie Ericson

Cathie Ericson is a freelance writer based in Portland, Oregon, and mom of three teen boys. Read more about Cathie at CathieEricsonWriter.com.

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