Children start learning about money when they’re very young, playing with a toy cash register or feeding coins into a piggy bank. You can continue this interest in money by helping them open a bank account. But how old do you have to be to open a bank account?
Minors under 18 benefit from a bank account for many reasons. They can learn how to save money and see how interest works in their favor. They can use a debit card to shop without needing cash.
Though there are many perks to a minor having a bank account, it’s difficult to open a bank account if you’re under 18. Banks require you to sign a contract, which means you need an adult. Therefore a minor needs to have an adult sign with them.
Can You Open a Bank Account at 16?
Anyone who is 16 years old can’t open a bank account on their own. Starting an account requires signing contracts, so an adult needs to be on hand. The adult will ensure that the minor understands the guidelines of the contract. The adult also agrees to take responsibility for the account until the minor is old enough.
Though a 16-year-old can’t open a bank account on their own, they can have a joint account with a parent. A joint account is a great way for a minor to learn money management skills. They’ll also have an opportunity to start saving money for their future.
Many 16-year-olds have part-time jobs and want to have some control over their money. A bank account gives them the option to save money for their future. They’ll also get perks like using a debit card for buying goods online.
You can choose to open a standard joint account for your 16-year-old. You might prefer to look for child-friendly accounts that help them learn good financial habits. The adult named on the account will have the same access to the funds, both depositing and withdrawing, as the child. Therefore it’s important that the child trusts the adult and vice-versa.
Keep Your Child Involved
It’s tempting to manage your child’s bank account yourself, especially if you’re depositing money for them. However, you should make sure to involve them in the process. The learning experience starts as you look at different types of accounts together. Help your child understand the difference between checking and saving accounts.
Allowing your child to help choose the financial institution and type of account gives them a sense of ownership over their money. They’ll feel more involved in the process and have a greater responsibility.
The more you advise them on financial matters while allowing them to take control of it all, the more they’ll understand banking. As they grow up, they’ll have a solid foundation that will keep them fiscally responsible as adults.
Bank Account Under 18 Without Parent
Unless a child is legally emancipated from their parents, they can’t open a bank account on their own if they’re under 18. This limitation doesn’t mean they have to have their parents’ names on the account, though. If the minor doesn’t trust their parents to have access to their finances, they need to find another adult they can trust.
The bank doesn’t require that an adult who’s related to you must co-sign your account. You could ask a family friend or youth leader that you trust to open the account. Just remember that whoever is on the account will have access to both deposit and withdraw funds without question.
There are several types of accounts for minors of varying ages. Some have special guidelines for children under 12 to start a savings account. Once your child is old enough to work, they can upgrade to an account with different allowances so they can deposit and spend their money more freely.
While there’s no harm in creating a standard checking or savings account for your child, finding one geared towards minors has its perks. The banks often have financial literacy materials so your child can learn while they’re saving their money.
What You Need to Open an Account
Some banks let you open an account online, but most ask you to go to the nearest branch so they can verify your identity. To open an account, you’ll need a few official documents. These include:
- the minor’s photo ID or passport
- the adult’s photo ID or passport
- both people’s social security numbers
- the minor’s birth certificate
- proof of address like a utility or phone bill
If you’re opening a minor-friendly account, you might not need any money upfront. Other accounts will require an initial deposit, and there might be a minimum amount they’ll accept. Make sure you or your child have this money ready to start banking.
Certain financial institutions might have different requirements, so it’s best to check online or call to verify before you go.
Once you’re at the bank, you can talk to an employee about the best type of account for your child’s needs. They might have advice on certain accounts with higher interest rates or lower fees. Make sure you involve your child in this decision so they feel a sense of ownership in the process.
What Changes When They Turn 18?
Once your child turns 18, the bank lifts any restrictions on a child-friendly account. This means that if your minor had an account with no balance limit and no fees, then they need to pay closer attention to these issues. The bank will let you know before any of these changes go into effect, and you can read the fine print on their website.
Because your child is now a legal adult, they don’t need your name on the bank account anymore. There’s no harm in keeping your name on the account, but your teen will probably want it off. Removing your name gives them full ownership of their bank account and funds.
What Age Can You Open a Bank Account?
So, how old do you have to be to open a bank account? Adults can open an account for their minor children at any age—even for a newborn baby! Accounts for very young children are typically to save money for their education and future expenses. Children under certain ages don’t need access to their own funds.
Once your child is a teenager, they’ll want more access to their money. When they get a part-time job, they’ll need a place to save their money. Keeping money in a bank account can help minors understand the importance of saving.
Having a checking account also gives teens a debit card to use. This is a great way to spend money because they don’t have to carry cash. If they lose cash, it’s gone, but if they lose a debit card you have some protections. You can contact the bank to have the account flagged and the card cut off.
If your child is using a debit card, you’re also able to see what they’re buying. Since your name is also on a minor’s account, you can see their bank statements. If they withdraw money from an ATM, you won’t necessarily know what they’re buying. You’re still able to have more information than if they solely use cash for all expenses.
Opening a Bank Account For a Minor
Most financial institutions in the United States won’t allow anyone under 18 to have their own account. The only exception is if you have paperwork showing that you’re legally emancipated.
While a minor can’t be the only name on an account, banks and credit unions have options for adults to open an account for a minor. These accounts include:
- joint
- custodial
- prepaid
Joint Accounts
Adults in domestic partnerships and marriages often have joint accounts to share funds. A joint account is one bank account with two people’s names on it. Both people named on the account have permission to deposit and withdraw money.
Adults can share joint accounts with their minor children as well. Both names on the account can deposit and withdraw money, just as an account shared between two adults works. If your child is too young to have a job, you might choose to deposit enough money for them and set spending limits.
You can open a joint savings account, checking account, or both. Some banks offer special accounts for minors to help them learn money management skills. These accounts might have benefits for younger children, such as:
- no minimum balance required
- parental limits on debit card spending and ATM withdrawals
- apps to track spending and savings
- discounted fees or multiple warnings before they charge a fee
Custodial Accounts
Custodial bank accounts are a way to create a bank account for your child without having to open a trust fund. They fall under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) depending on your state.
You’re responsible for the account until your child is a legal adult. Though you’re in control of the account, the owner and primary beneficiary is your child. These accounts are ideal for long-term savings goals, like putting aside money for your child’s college education, a car, or living expenses.
These accounts pay off in the long run, so it’s worth opening one for your child to have once they turn 18 or 21. Since they’re not set up for daily use, you might also want to open a checking account so your child can access other money.
Education Accounts
Custodial accounts differ from education accounts. You can deposit money in a custodial account and earmark it for education, but there are no guarantees. Once your child has access to the custodial account, they can spend it how they choose.
Education accounts, on the other hand, have tax benefits. There are different types of education accounts. Some pay for private school tuition, college expenses, or a trade school degree. It can go towards tuition or room and board. Talk to your tax advisor about which account is best for you and your child.
Prepaid Accounts
You can teach your child money management skills without opening a bank account for them. A prepaid debit card is a great way to limit their access to money while still giving them some freedom.
Prepaid debit cards give parents the chance to transfer money to their children. You don’t have to hand over cash or commit to a bank account. There are prepaid debit cards specifically for minors. They have apps for the parents to reload the card, see how much their child is spending, and get notifications on purchases.
Things to Consider
Read the fine print on bank accounts before you open one for your child. Some banks have limits on how many transactions you can complete each month. If you go beyond their allowance, you’ll have to pay additional fees.
Savings accounts were once limited to six withdrawals per statement, but that has changed as of April 2020. Because savings accounts are for long-term savings, the bank would charge you fees when you access these funds too frequently.
While there’s no end date on this new regulation, you still want to carefully consider the type of account you open for your minor. If they’ll make many transactions each month then you’ll want to open a checking account. Not only will you get a debit card, but there are no transaction limits.
Regardless of the type of account you open, make sure your child understands the benefits of saving. If there are any limits in place, explain them to your child and ensure they know the consequences.
Final Notes
Opening a bank account for people under 18 is a great way to instil a sense of responsibility. They’ll start learning money management skills at a young age, which can serve them well as they mature.
Whether you sign up for a joint checking or savings account for your child or give them a prepaid debit card, you’ll set them up for success. You can even put money in a custodial account so they’ll have future expenses covered. Consider opening a joint account at your financial institution or finding a kid-friendly option. Helping your child learn how to take care of their money will empower them to be independent.
