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The average credit score of those ages 18 and 25 was 679 in 2022, the lowest of all age brackets, according to Experian data. Young adults and teenagers often lag behind older consumers simply because they lack the time necessary to build a good credit score.
If you're a teenager, young adult, or the parent of someone in that age range, consider looking into a Step bank account, which can help teens and young adults get ahead in their financial journey. Step also offers a credit-builder Visa Card, which easily competes with the best credit builder loans.
Learn more about how Step can set your children up with a improve your credit score, how to sign up, and whether it's the right product for you.
Step Overview
Founded by financial industry veterans CJ MacDonald and Alexey Kalinichenko, Step is an all-in-one mobile banking app that provides young teens and adults with the financial tools they need to make smart money decisions early in life. According to Step's website, its mission is to "improve the financial future of the next generation."
While Step is not a bank, its products and services are provided through its FDIC-insured partner, Evolve Bank & Trust. In other words, up to $250,000 of your deposits will be protected in the unlikely event that the company goes belly up.
Not only does the Step app allow you to invest in securities like Bitcoin and earn 5.00% APY on your savings, but it also helps boost your credit score. With the secured
Like a traditional credit card, Step will report payments to the credit bureaus, contributing to your credit history. You can also earn rewards when you use your card. However, Step doesn't charge interest on monthly payments, so you don't run the risk of mounting debt like a traditional credit card.
How Does Step Credit Builder Work?
Unlike traditional secured credit card that requires you to make monthly payments on your purchases, the Step card functions more like a debit card. After opening your Step account, you'll be asked to make a deposit. Then, with the app's Smart Pay feature, your card purchases are automatically paid off each month using the funds available in your deposit account. So, if your Step account only has $250, you can only spend $250.
Since you're only allowed to spend the amount you've deposited into your account, it's impossible to overspend. You also won't miss a payment because all the purchases are already paid for with the money in your account and Step doesn't charge interest on your balance. So it's unlikely that the Step Credit Builder lowers your credit score.
If you're 18 and older, you can opt into the credit reporting feature to boost your credit score and build your credit file when you use the
While the basic
How To Sign Up For Step Banking
You can sign up for the
Also, though Step doesn't perform a hard credit pull when you sign up for an account, you'll need to provide your US phone number and SSN to help Step verify your identity.
Once you've created an account, you'll immediately receive a virtual
Step Banking Pros and Cons
Step boasts various features, making it one of the most popular banking solutions among teenagers and young adults. That said, Step is not without its downsides. Consider the following pros and cons before opening an account.
Step Banking Pros
Available to users under 18: The
Credit builder reports to all three major credit bureaus: Some credit builder cards on the market only report your information to one or two of the major credit bureaus, but Step sends your positive credit history to all three.
Zero interest charges or fees: The
Earn rewards: The
No minimum deposit required: There is no minimum balance required for the Step card, making it easy for you to sign up for an account and start building your credit.
Step Banking Cons
No customer support via phone: Step's lack of phone support can be inconvenient if you prefer having someone walk you through your issues instead of sending back-and-forth emails or messages.
Low ATM withdrawal limit: Because Step is primarily a teen banking platform, you can only withdraw up to $250 from an ATM within 24 hours and up to $1,000 within 30 days. So, while Step allows you to withdraw money from their network of 30,000 ATMs for free, its low withdrawal limit can be a deal breaker.
Can't deposit money through an ATM: Another one of Step's downsides is that you can't add money to your account through an ATM. Instead, you'll need to link a debit card from another bank account to your Step account, set up direct deposit with your employer, or transfer funds from Venmo, Cash App, or Paypal.
No prior payment history reported: Some credit-building accounts geared toward teens and parents, like FreeKick, will be able to report up to two years of prior payments when the account holder turns 18. Step doesn't offer this feature.
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Step Frequently Asked Questions
How do I contact Step customer service?
You can reach Step's customer service team at hello@step.com or by starting a live chat with them from the mobile app. They're available from 6 a.m. to 9 p.m. PST Monday to Friday and 6 a.m. to 6 p.m. PST on the weekend. Unfortunately, Step currently doesn't provide phone support.
How fast does Step build credit?
Step reports your credit history to the credit bureaus every month, so you most likely won't see an immediate bump in your credit score after creating a Step account. But, as long as you use your Step card regularly, you'll see a positive impact on your credit over time.
Can I cancel Step?
Yes, you can cancel your account by starting a chat with Step's team in the app. Keep in mind that if your account is reporting your payments to the credit bureaus, you could hurt your credit by closing your account.