Step is a new online banking solution that is targeted towards teens. Like most mobile banking apps they offer an account with a linked debit card and no monthly fees or minimums. They also advertise an interest rate up to 2.5% APY. It’s available to teens under the age of 18 with parental permission, but not available to anybody 13 or under.
The F.A.Q claims they are able to offer this rate because they don’t have the traditional overheads other banks have. It doesn’t mention any requirements to earn this 2.5% APY rate. The founder of Step is also the previous founder of Gyft that was sold to First Data a few years ago.
The debit card offered will be a Visa debit card and will allow parents to set up spending limits and have the ability to turn the card on and off. At the moment you can’t sign up for Step directly, but you can join the wait list. If you refer a friend to the wait list you can also get a $1 bonus.
My personal opinion is that I’ll believe it when I see it. It’s easy to make promises when you haven’t launched yet, but it’s harder to actually keep those promises. My guess is that by the time Step launches either 2.5% APY won’t be a competitive high yield checking account or that they will add requirements to get that rate. I don’t have kids so I’m obviously not the target market, but I’d be interested to hear from those who do have kids.
Hat tip to reader Alec E
Not sure if there’s an updated post on this, but it looks like Step is offering a 5% APY with a $500 monthly DD
William Charles ^ fyi
Teenagers just think about ways to make money but they usually don’t consider the implications of, for example, earning interest money, which you have to include when you do your taxes. That changes things mainly for parents, since kids don’t worry about those issues until later. I personally don’t like this idea. I’d rather get him an extra card from my account with specific spending limits.
It seems to be available to adults too, not just under 18.
“previous founder of Gyft” made me think Vinny Lingham, but it looks like it’s CJ MacDonald in this case.
I’m 41. Can we open this account?
Yes
Anyone who’s 13 is technically a teenager
Usually a rate this high would require a number of requirements that are not practical for most teens. If it requires 10 debit transactions, for example, that would not encourage the type of spending habits that I would want my teen to have at their age. A local credit union is probably a more practical way to start your kids out with a checking/debit account and a small car loan to build credit(once 18 of course). I keep each of my kids savings visible to them in a high yield savings account.
Get your kid a bluebird or a serve. Set it to auto reload. That way you get more BB/Serves for MS and your kid can get higher savings rate lol.
The real question of course is how one loads such an account.
It’s gotta be just ACH. Why allow a CC?
The app screen seen in the promotional banner in the post makes it look like a Venmo competitor that happens to pay interest.