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Credit Cards

Step banking review: a money management app that gives teens access to their first financial products

Step offers teenagers a bank account, a Visa Step card and a mobile app. Select explores this new all-in-one mobile bank service.

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Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We earn a commission from affiliate partners on many offers, but not all offers on Select are from affiliate partners.

It can seem like a big task for parents who want to get their children started on a path towards financial success. You might want to build your child's credit score and open a bank account for them, but you'll have to go to a bank and make your child an authorized user on your credit card in order to so. This is where Step, a new mobile banking service that's built for teens, comes in.

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

Step has garnered the attention of numerous celebrity and influencer investors 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 that's catered towards children between the ages of 13 to 18. It's a completely free service that offers users a bank account and a Visa Step Card. MacDonald explains that Step resists labels, it's neither a checking account nor a savings account and the Visa Step Card is neither a credit card nor a debit card.

"We kind of combine the solutions... where they [customers] have a deposit account where they keep all their money, and then they have a secured spending card that they can [use to] shop anywhere Visa is accepted," MacDonald said.

The Step card

First off, the Visa Step Card is a type of secured card. However, it is not a debit card or a secured credit card. A traditional secured credit card is a card intended to help people with bad credit or no credit build their credit score. Secured credit cards function similarly to a debit cards but unlike a debit card, they can help improve your credit score.

With the Visa Step Card, teenagers are only able to spend up to the amount that's deposited in their Step bank account. If your account has $100, you can only spend $100. Unlike traditional secured credit cards, the Visa Step Card doesn't require you to make monthly payments on your purchases as all of the money you spend with the card must be backed up by money in your Step account. This means you can build your credit history without having to make any monthly payments.

If, however, you're 18 or above and are interested in earning rewards on your spending while building your credit score, a card like the Petal® 2 "Cash Back, No Fees" Visa® Credit Card or the Discover it® Secured Credit Card could be a better option for you. The Petal 2 card is an alternative to a secured card — it doesn't require any credit history, has no fees and doesn't require any deposit. It starts cardholders out with earning 1% cash back on eligible purchases right away and if you make 12 on-time monthly payments, you can earn up to 1.5% cash back on eligible purchases.

Since the Discover it® Secured Credit Card is a secured card, you have to be at least 18 to be approved and you'll need to put down a deposit of at least $200. Starting at seven months from account opening, Discover will automatically review your credit card account to see if you can transition to an unsecured line of credit and return your deposit. You can earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter and 1% back on all other purchases with this card.

Discover it® Secured Credit Card

On Discover's secure site
  • Rewards

    Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.

  • Welcome bonus

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

  • Annual fee

    $0

  • Intro APR

    N/A on purchases

  • Regular APR

    24.49% Variable

  • Balance transfer fee

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

  • Foreign transaction fee

    None

  • Credit needed

    New / Rebuilding

*See rates and fees, terms apply.

The Step bank account

In order to open a Step account, teenagers under the age of 18 will need a sponsor above the age of 18. Sponsors can monitor their teenager's spending activity, add money to the account, and manage or freeze a teenager's card. You can technically open an account with Step if you're under 18, but you'll need a sponsor, such as a parent or a legal guardian above the age of 18, to add money to your account or to start using the Visa Step Card.

You can transfer money to your teenager'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 into a Step bank account, but you can receive direct deposits into one.

Step also offers a similar functionality to Venmo's peer-to-peer payment tool which allows cardholders to send money to other people with a Step account instantly. However, you can not 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 it's probably not a great choice for parents or teenagers planning to store a lot of cash because of the lack of interest offered. A high-yield savings account is a better option for saving money that you're aren't using for your regular needs and will yield a greater return.

The other important element of Step is the app, which is available in the Apple Store and the Google Play Store. The app offers users a glimpse at their own spending habits, making it easier to budget and understand the expense categories they can cut back on.

Fees

Step is a completely free service: there's no minimum deposit, no fees for ATM access, no monthly fees, no overdraft fees and no interest rates. However, if you're going to withdraw money from an ATM, you need to be using one of the 35,000 ATMs within Step's network to avoid ATM fees. Step makes money like most credit cards do, through interchange fees whenever someone uses a Step card.

Bottom Line

Step is a good choice for teenagers getting their first credit card and/or bank account. Since Step doesn't charge credit card interest, has no fees and requires no minimum deposit, it makes it unintimidating for teenagers to start building their credit and to learn about spending, budgeting and finance. Additionally, because it's an all-in-one service, parents won't have to open a separate checking and savings account for their teenager and can build their teen's credit without worrying about monthly credit card payments.

One drawback of Step is the lack of interest on deposits. If you plan on using your Step account like you would use a checking account, it's probably a good choice. If, however, you're looking to save a lot of money, you're better off investing it in an index fund or placing it in a high-yield savings account.

Petal 2 Visa Credit Card issued by WebBank, Member FDIC.

For rates and fees of the Discover it® Secured, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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