Is Step a Good Bank? A Review of the Teen Finance App

Step is a financial technology platform designed to help teenagers and young adults manage their money.

Understanding Step’s Core Services

Step provides mobile banking services primarily for teens and young adults, acting as a digital platform rather than a traditional bank. The company partners with Evolve Bank & Trust, which is a Member FDIC institution, to offer these services, including a bank account and a Visa card to its users.

The core offering includes a secured Visa card, which is linked to the user’s account balance. This means users can only spend the funds they have available in their account, preventing overdrafts and debt accumulation. This structure is designed to help younger users begin building a positive credit history, even before they reach adulthood.

Key Functionalities for Users

The Step platform offers various functionalities to help users manage their finances effectively, from daily spending to long-term savings and even investing. The Step Visa card can be used anywhere Visa is accepted, including popular digital payment platforms like Apple Pay and Google Pay. Users receive real-time transaction alerts, providing immediate feedback on their spending activities. While there is a daily spending limit of $1,000 for purchases, parents cannot set custom lower spending limits within the app.

Parents can monitor their teen’s account balances, review transaction histories, and even temporarily freeze the card directly from their own app interface. For savings, Step includes features like a round-up tool, which automatically saves spare change from purchases. Additionally, users who opt for the Step Black tier can earn a 4.00% savings rate, provided as cash rewards.

Money movement within Step is designed for convenience, allowing users to receive funds through direct deposit, often up to two days earlier than traditional paydays. Funds can be added to a Step account by linking an external bank account, using a debit card, or transferring from services like Venmo, Cash App, or PayPal. Users can also send and receive money instantly with other Step app users.

Although direct transfers to external bank accounts are not supported from within the app, users can initiate instant transfers to linked external accounts or eligible debit cards, subject to fees. Cash deposits are possible at over 70,000 retail locations.

Step also incorporates financial education components, aiming to improve financial literacy among its users. The platform offers a “Money 101” curriculum, providing a structured approach to learning about personal finance.

Furthermore, Step offers investing capabilities, allowing teens to invest in over 1,000 stocks and exchange-traded funds (ETFs), as well as Bitcoin. Minors require parental permission to open an investment account, and parents can set risk thresholds and monitor their teen’s portfolio activity. Users can begin investing with small amounts, starting from as little as $1.

Safeguarding Funds and Information

Protecting user funds and personal information is addressed through several layers of security measures within the Step platform. Funds held in Step accounts are insured by the Federal Deposit Insurance Corporation (FDIC) through its partner bank, Evolve Bank & Trust. This insurance covers deposits up to the standard limit of $250,000 per depositor. For Step Black members, the FDIC insurance coverage can extend up to $1,000,000.

Fraud protection features include Visa’s Zero Liability Policy, which shields users from responsibility for unauthorized charges made with their Step Visa card. The app provides instant notifications for transactions and allows users to quickly lock or freeze their card if it is lost or stolen, or if they suspect fraudulent activity. Step also employs continuous fraud monitoring systems to detect and prevent suspicious activities.

For data security, all sensitive user data is encrypted both during transmission and when stored, adhering to industry-standard encryption protocols. Access to personal data is strictly controlled, granted only to authorized personnel on a need-to-know basis, and regularly reviewed. The platform uses secure storage environments and implements multi-factor authentication to help ensure only authorized users can access accounts. Physical card security is enhanced by the use of EMV chip technology and contactless payment options.

Associated Costs

Step’s basic service model is designed to be largely free of common banking fees. There are no monthly or annual fees for the standard Step account. Similarly, the platform does not charge overdraft fees; instead, transactions that would exceed the available balance are simply declined. This policy helps users avoid unexpected charges and promotes responsible spending.

ATM withdrawals are free when using any of the more than 30,000 in-network ATMs. However, users may incur fees from the ATM owner for transactions made at out-of-network ATMs. Foreign transaction fees may apply.

While many core services are free, some specific actions or premium features may involve costs. The Step Black tier, which offers enhanced benefits like higher cashback rewards and an improved savings rate, carries a monthly fee of $4.99. This fee can be waived if a user sets up a direct deposit of $500 or more per month. A fee of approximately 1.99% and a fixed charge may apply when adding funds to the account via a linked debit card, particularly for instant transfers. Users should review Step’s most current fee schedule.