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14 May 2015 / Matthew D. Urban

Youth Accounts: Creating a Member for Life

Recently I had an opportunity to volunteer at a Financial Reality fair that was hosted by a local credit union chapter group. The purpose of the event was to provide local high school students the opportunity to visit numerous booths at which time they had to choose, among other things, what type of car they wanted to purchase and what type of home or apartment they would live in. These determinations were made within the confines of a pre-established occupation and salary, and presumed that the students were just beginning their first job after high school or college. I have volunteered at several of these events in the past and after each instance, including this one, I came away somewhat alarmed at how little many of the students understood about how much everyday items cost, let alone basic financial principles. The students that excelled at the exercise, when asked, consistently stated they learned about finances at an early age from their parents, and that many of those same students and their families had long-standing relationships with a local credit union.

As is the case in many instances in the financial marketplace, credit unions play a unique role due to the personal touch many offer their members - and youth accounts are no exception. However, while many credit unions offer some variation of youth accounts, what frequently gets lost in the daily course of events is the important role a vibrant youth program can play in keeping current members engaged, and in generating new members at a time when there is substantial competition from other banks and credit unions. Additionally, it is well established that if a banking relationship is developed early on, the chances of that relationship continuing once a child becomes an adult is likely.

Beyond the direct benefits to a credit union, youth accounts also help to reinforce the value of money, which in turn creates value to society at large. This importance has not been lost on entities such as the Consumer Financial Protection Bureau (CFPB), which recently posted a blog on March 11, 2015 detailing the importance of opening a savings account for children. Along with a discussion of the value of youth accounts in general, the CFPB also provided a useful link to guidelines issued by various federal regulators, including NCUA (National Credit Union Administration), to assist in the opening and managing of youth accounts.

In addition to the CFPB's efforts, this past April was designated National Credit Union Youth month, during which CUNA (Credit Union National Association) adopted the theme "Wild About Savings." CUNA also sponsors the "Thrive by Five" program that teaches preschoolers about spending and savings through interactive activities the entire family can particiapte in. Furthermore, a review of various credit union websites from across the country reveal that many credit unions have vibrant youth programs that offer a wide variety of services and products to children of all ages. Several credit unions also link to third party websites that offer fun and informative activities for children to engage in that teach the value of money.

Although the creation and maintenance of a thriving youth program has many potential benefits for enhancing and expanding a credit union's membership base, there are also several areas of concern when it comes to these accounts. One specific issue involves a credit union protecting the privacy rights of youth members through compliance with the Children's Online Privacy Protection Act (COPPA), 15 U.S.C. §6501-6505. COPPA regulates the collection and dissemination of personal information of children under thirteen (13) years of age to third parties without proper disclosure and parental consent. Compliance with COPPA is not only vital when a child visits a credit union run website, but also is important when establishing a relationship with a third party website provider that is linked to a credit union's own webpage. As is the case with any vendor relationship, it is essential that a credit union engage in appropriate due diligence before entering into an agreement with that vendor.

Financial dealings and relationships play a large role in our daily lives, and in most instances initial positive experiences provide a gateway to opportunity and success. Too often, however, bad decisions involving money can also destroy those same opportunities. As a result, teaching children early on about the value of money is vital to their long term success. Credit unions have a unique opportunity to be a driving force in helping to create positive experiences.In addition to the overall societal benefit, a vibrant youth program allows a credit union to engage existing members through their children, while also creating new long term members that represent the future generation of credit union members. If given the proper attention, the creation and maintenance of a vibrant youth program can be a benefit for all involved.
 

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Matthew D. Urban

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