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Having access to a bank account can give kids a place to save birthday money from grandma or earnings from a part-time job. But people under 18 typically can’t open a bank account by themselves. Instead, banks often require a parent or guardian to share ownership of the account. Depending on the type of account, the child may or may not be able to withdraw funds before becoming a legal adult. Read on for more details about kids, teens, and banking.
Minimum Age to Open a Bank AccountSo how old do you have to be to open a bank account? It depends on the bank. Generally, people younger than 18 need to have a parent or guardian present to open an account. Federally chartered banks require a parent or guardian to co-own the account jointly with the teen. That said, there is no nationwide minimum age to open a bank account. Some state-chartered banks permit younger teens to open bank accounts in their own name. That’s not usually the case, though, so you’ll want to check your bank’s terms and policies.
When Should Kids Get a Bank Account?There is no “right” age to open a bank account. A parent or guardian should do it when they believe the child is ready for that responsibility. Here are some factors to consider when making the decision.
Parents or guardians may find it useful for children to have access to a bank account. An adult may want to deposit their child’s allowance into the account to teach the child how to spend sensibly. Or the account may be a more convenient way for the child to manage cash they’ve earned or saved.Some parents will want their teen to have a debit card (though a credit card might be too tempting). A teen with a debit card could fill their car’s gas tank or pick up groceries for the family, regardless of how much cash they have on hand.
|• An account can help children learn the value of saving.• An FDIC- or NCUA-insured institution keeps the child or teen’s money safe.• The bank may issue the child a debit card if they meet age requirements.||• Bank accounts and debit cards sometimes result in fees.• Debit cards make it easy for kids to spend all their money.• Joint account ownership could lead to conflict between child and adult.|
Can You Open a Bank Account on Behalf of a Minor?Yes. Parents and guardians open bank accounts for minors all the time. To do so, the adult simply needs to provide their own identification and other personal information (such as their Social Security number and home address) along with the child’s. At some banks, the adult must already have — or must open — an account there.When opening a joint account, usually the parent or guardian will visit the bank with the child. The adult and the child will be co-owners of the joint account, meaning the child has access to the money (subject to some controls the bank and parent may set up). Other types of accounts keep the money completely off limits to the minor child. For example, a custodial account is a type of savings account that prevents a child from accessing the funds until they become a legal adult.
Minimum Deposits for Kids' Bank AccountsMany bank accounts require a minimum opening deposit. For children’s accounts, though, some banks waive or drastically lower the required amount. Check with your bank to find out how much you and your child need to deposit to open the kind of account you want.
Types of Bank Accounts for MinorsThere are several types of bank accounts that parents can open for minors. Two of the most common are custodial accounts and joint accounts.
Joint AccountThe simplest type of shared account is a joint savings account, an account that is co-owned by multiple people. In this case, the child would be one owner and their parent or guardian would be another.
Custodial AccountAs referred to earlier, this is a type of savings account that a parent or guardian can open for a child. A custodial account remains under the control of the parent or guardian until the child becomes a legal adult (age 18 or older, depending on the state). At that point, the child takes control of the assets. Recommended: Guide to High-Yield Savings Accounts
Regulating Bank Accounts for MinorsThere are two common types of custodial accounts that have specific rules: Uniform Transfers to Minors Act (UTMA) accounts and Uniform Gift to Minors Act (UGMA) accounts. The account types differ in the types of assets they can contain. For both accounts, deposits of up to $15,000 in any given year are exempt from Federal taxes.For details on how UTMA and UGMA accounts might or might not suit your situation, it’s worth consulting an attorney or an accountant.Other regulations can affect bank accounts for minors. For example, savings account interest — that is, unearned income — in excess of $2,200 is taxable to the child. They are taxed at either their own rate or their parents’ — whichever is higher. Also, a parent generally may not remove the child from a joint account (or vice versa) without consent. If the account does allow removal, the terms and conditions will say so explicitly.
Opening a Bank Account Once You Turn 18Once a minor becomes a legal adult at age 18, they may want to open their own bank account. They can open a checking or savings account by taking the following steps.
Gather Necessary DocumentationBanks will generally require certain kinds of documents to open an applicant’s bank account:
- Proof of identification. This usually has to be a current government-issued photo ID, such as a driver's license, passport, state ID, or military ID.
- Proof of current address. Banks will typically accept an applicant’s mortgage statement, utility bill, or lease document as proof of address.
Fill Out an ApplicationBanks with branch locations will generally open customer accounts in person. In many cases, these banks will also allow customers to open accounts online. For online-only banks, customers fill out their application on the bank’s website.
Make an Initial DepositMany banks will require new customers to make an initial deposit. If you’re opening the account in person, bring some cash or a check for this purpose. If you’re doing it online, you would typically fund the new account by electronic transfer from another account. You’d need to supply the other account’s routing number and account number. If you want to deposit a check, you may be able to use the bank app’s mobile deposit feature.
Set Up Direct DepositsOnce the account has been created, the account owner may choose to set up direct deposit. It would import paychecks, for example, into the checking account immediately. Direct deposit can save someone the step of logging into their bank’s app to make a mobile deposit, or of visiting the bank to do it in person.
The TakeawayThere is no legally specified minimum age to open a bank account, but if someone under 18 wants to open an account, a parent or guardian usually has to be involved. Regulations typically require that an adult be a co-owner of a joint account until the child turns 18 (or even longer, depending on state laws).
3 Money Tips
- Because online banks don’t have the overhead costs that brick-and-mortar banks have, they may offer a higher savings account interest rate. Just keep an eye out for minimum balance requirements and monthly fees.
- To get into the savings habit, consider having 10% of your paycheck directly deposited into your savings account. Or, set up a small automatic recurring transfer from your checking account into your savings account on the same day each month.
- An emergency fund is a key financial safety net. Aim to have three-to-six months’ worth of living expenses tucked away in a separate account that earns interest, but allows you to access the money if needed (such as a high-yield savings account). In some situations, it may be appropriate to have up to 12 months of living expenses saved.
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About the Author
Jacqueline DeMarcoJacqueline DeMarco is a personal finance writer and editor based in Southern California. While she spends the bulk of her time writing about complex financial issues, she also tackles a variety of subjects ranging from food to fashion to travel. Her work can be found across dozens of publications such as Credit Karma, LendingTree, Northwestern Mutual, The Everygirl, and Apartment Therapy.