How Old Do You Have To Be To Open A Bank Account?

As more and more things move online, money has become a significant part of a child’s digital world. Parents need to be aware of the rapid technological changes in order to explain to their children how money is handled today.

For example, in the past people received their salaries through paper paycheck in an envelope. Now the money is simply wired online. Put simply, technology has made it very simple to make purchases or transfer money, and kids need to be aware of it.

It’s important for kids to learn how to use banking products from a young age, so that they can use them safely. Getting comfortable with banking products, and their usage can teach children important money management skills. It will give them a sense of independence and help them understand the importance of saving, and spending wisely. 

Opinions differ as to when a child should get his/her own bank account depending on the maturity level, but the general consensus is that children should be given a bank account as soon as they start receiving money for savings. This will help them understand that saving can enable them to make smarter spending decisions. The majority of experts think that children are capable of grasping the concept of banking between ages 8 and 12.

Current laws do not permit a minor to have a personal bank account. In fact, their parents or guardians need to set up a custodial or joint account for them. A custodial account is opened in a child’s name, but all the investment decisions are made by the parents. The child gets full ownership of the account upon reaching adulthood (18 or 21, depending on state laws).

In the case of a joint account, both the parents and the child have access, but the parents have supervisory powers. As is the case with a custodial account, a child can assume full control of the joint account on becoming a legal adult. 

How Old Do You Have To Be to Open A Bank Account?

You need to be considered a legal adult (18 or 21 years of age) to open a bank account. However, it does not mean that kids cannot have their own bank accounts. They too can learn about money with their own special kids’ savings accounts. The only restriction is that a child’s parent or guardian needs to act as a cosigner.

In fact, many banks and credit unions offer savings accounts for children, with proper control in place to ensure that the money is being spent wisely. For example, there are saving accounts for children through which parents can restrict the amount that can be withdrawn from ATMs, limit debit card access or decide how much kids can spend at a particular location.

Since cosigning means a joint account, both parents and kids will have access to, and partial ownership of the account. Parents hold supervisory power, which means they will be held accountable for any fees or spending incurred by the child. It means parents need to actively supervise their children spending habits to ensure that the money is being used judiciously. 

Is A Checking or Saving Account Best For Children?

Both checking accounts and savings accounts offer routing and account numbers, which means both the account types allow you to send and receive money by way of paychecks and wire transfers. 

And as far as differences are concerned, checking accounts are meant to facilitate transferring funds, spending money or paying bills. There are no restrictions upon the number of transactions you can have per month with your checking account. Also, since checking accounts generally do not pay any interest, it does not make much sense to leave a lot of money in this account.

Savings accounts on the other hand are designed to keep safe your money that you do not intend to spend in the near term. This account type provides interest but has federally-regulated standards on how many withdrawals you can make per month. 

Requirements for a Child Bank Account

Minors cannot own and operate their bank account. They need their parents or guardian as a joint owner on the account.

Parents are advised to set up a joint account with their children as having their own account can teach them valuable lessons about financial responsibility. It will also help them understand the importance of wise spending, saving for the future and aid them in achieving their financial goals.

What Bank Account Is Best For Children?

There are dozens of banks, credit unions and financial institutions that offer both savings accounts and checking accounts for kids. However, checking accounts usually come with age restrictions. For example, a kids checking account is generally meant only for teenagers, whereas kids savings accounts are open to children of any age. In fact, there are savings accounts even for newborns.

Parents can also get their children prepaid debit cards for kids in place of a checking account.  These cards have become very popular, and come equipped with a host of features that let parents instill positive money habits in their kids.

Some of the most popular debit cards for kids are GoHenry, BusyKid, Greenlight and Step.  All of these come with apps that let parents track the spending habits of their kids, assign and reward any chores that they complete, and transfer money to the account. You can also find apps that also include saving and investing tools to help kids build good money habits.

In case you are hesitant about allowing your kids to handle cash, you can opt for a custodial account for them. Formally referred to as a Uniform Transfers/Gifts to Minors Act (UTMA/UGMA) account, a custodial brokerage account allows a parent to make all the investment decisions for the child until the child reaches adulthood (18 or 21, based on state laws).

Custodial accounts are usually held at investment brokerages, banks, and other financial institutions. The child cannot access the funds until they are recognized as legal adults. A custodial account is generally intended to help a kid go through college, make an initial payment for a home, or pay for a car to cite a few examples.

How To Pick The Right Bank For My Child

Once you are sure about the type of account you want for your child, you can initiate the process of selecting the right bank, credit union or fintech companies from dozens of options that are present. It may seem daunting at first, but then remember that it’s your hard-earned money and your child’s financial future that is at stake.

There are many kid-centric accounts to choose from, and if you feel overwhelmed, start by comparing:

• interest rates,
• monthly fees,
• ATM networks,
• app features,
• ease of operation, and
• cashback.

You can also ask your colleagues and friends for references, and their experience dealing with a particular firm. Also, reviewing websites like such as Trustpilot can help you form an opinion about a particular service provider.

How to Apply Online For Children’s Bank Account

It always helps to keep all of your financial and other important documents handy before you apply. It saves time and makes the entire process easier. Almost all the banks, credit unions or fintech firms allow for online applications, which means you can open an account for your child with the help of a few clicks of your mouse button.

As part of the U.S. Patriot Act, financial institutions are obligated to help the government fight the funding of terrorism and money laundering activities. Therefore, federal laws require that the person opening the account to furnish requisite documents to establish and verify his/her identity.

Typically, you will be required to submit documents, such as:

• a valid government-issued ID,
• your and your child’s Social Security number,
• the child’s birth certificate, and
• proof of address.

Also, you may be asked to furnish additional identifying documents by certain banks or credit unions where you wish to open an account. If you are not sure about what documents you will be asked to submit, you can get in touch with a support executive of the bank.

Also, please note that a traditional brick-and-mortar bank may ask you to personally visit the local branch along with your child for the account opening process. Applying online is always easier, but physically visiting the local branch to open an account should not take much time. 

Put Money into the Account

You’ll need to fund the account to make it operational. You can deposit funds into your kids account through your debit or credit card.

You can also transfer money through your bank account. However, there are some institutions where the conditions may vary. For example, you can fund Navy Federal Credit Union’s prepaid cards for teens only with a valid Navy Federal Visa card or Mastercard.

Activate the Debit Card

After the process is complete, you will be issued a bank or a debit card through which your kid can make purchases or withdraw money from an ATM.

The card is usually delivered within seven to ten days of the application approval. It usually needs to be activated by calling a toll-free number. There are also banks and credit unions that immediately issue a temporary card.

Install the Banking App

Banking apps make the job of monitoring the account rather easy for both the children and their parents. A child can conveniently check the balance using the app, whereas parents can use the app to monitor their child’s account or place restrictions on the fund is accessed and used.

There are also a few popular apps that allow parents to allocate certain tasks or transfer funds to the kids’ accounts in a few quick steps.

Age Restrictions For Kid’s Bank Account

As the name implies, it’s a kid account, which means the guardian must be an adult, and the child a minor. The age restriction for kids though may vary from bank to bank. It’s best to go through the bank’s or credit union’s website to know more about the age requirements.

Important things to pay attention to with respect to a kid’s bank account

Monthly fees:  Many banks generally charge zero monthly fees for a kid’s account. However, they turn the account into a standard account once the child reaches adulthood, and then start charging monthly fees. However, debit cards and checking accounts often come with recurring fees.

Amount of interest earned: Generally, kids’ savings accounts offer very little interest, but then there are banks and financial institutions that offer competitive APYs. As such, you need to research properly and compare your options.  Kids checking accounts generally do not offer any interest.

Features that offer financial management: Financial literacy features are generally absent in saving or checking accounts for kids. Debit cards for kids are the better option if you are looking for financial literacy features that could teach your children something about money management.

Age criteria:  Savings accounts are for children of all ages, while checking accounts are generally meant for teens.

Debit card: Based upon the account type and the bank’s or fintech policies, the child may be given a debit card to spend the money available in their account.  

Minimum balance to be maintained: More often than not, the minimum balance requirement is waived for saving accounts. However, for checking accounts, a minimum balance needs to be maintained to avoid fines or monthly charges.

Can I Have A Bank Account If I Am Not 18?

Opening a bank account requires entering into a legal contract on your own, which is only possible if a person is above 18 years of age, or older in some states. As such, a child or a teen cannot open a bank account.

However, children can open a bank account by having their parent or legal guardian as an account co-owner. The account opened could be either a custodial account or a joint account.

Best Bank Accounts for Children

There are many well-known banks and credit unions in the US that will open a bank account for a child. Whether you wish to teach your children the need and importance of saving money through a bank account, or your child needs an account to bank their income derived from part-time jobs or allowances given by parents, having a saving account is beneficial. 

The money parked in a bank account generates interest, and at the same time also teaches a child valuable lessons related to wise money management.

Before settling upon a particular kids’ savings account, parents need to pay attention to factors like:

• the savings interest rates offered by the bank,
• the commission charged,
• minimum balance requirements, and
• accessibility to the fund.

You would also like to know how the account will keep pace with the requirements of a growing child. We’ve done the hard work for you, and come up with a list of the best saving accounts for kids to help you choose an account best suited for your child.

Chase First Banking

Chase First Checking accounts and debit cards are meant for kids aged between 6 to 17. There are no monthly fees involved, which means you do not have to worry about keeping a certain minimum balance.

Parents have control over how much their kids can spend. They can make purchases with their debit cards, and you can set a limit on how much they can spend or withdraw at ATMs.

No fees are charged for withdrawing money from a Chase account, but a $2.50 surcharge is levied if money is withdrawn money from a non-Chase ATM.

The facility of recurring transfers is also provided. Users are not allowed to withdraw more than $100 from ATMs per day. Chase First Banking does not allow for direct deposits, nor are peer-to-peer transactions like PayPal or Venmo are allowed.

The Chase First Checking account offers a convenient way of teaching your kids valuable money management skills. Having their own account and a debit card with their name engraved on it gives a child a certain sense of financial freedom as well as financial responsibility.

Parental controls like setting up a limit on how much they can spend, and the ability to approve or decline the request for money can help parents keep track of what their kids are doing with the money.

Greenlight

Greenlight is a well-known debit card app for kids, managing total of $1.07 billion in 2021.

Parents can set flexible controls, and receive instant notifications when their kids spend money. The app gives the kids a chance to earn up to 1% cashback and 2% savings rewards (with conditions applied).

The app is intuitive and easy to use and navigate. Greenlight also allows parents to pay interest on the balance, which in turn encourages the kids to spend wisely and save more.

There is no minimum age requirement, but the monthly plans start at $4.99/month for up to 5 children. There is no purchase or ATM fee, and the firm offers a one-month free trial.

Kids can have a customized debit card with their own photo on it and can log in with touch or face ID.

Capital One

Capital One offers a MONEY teen checking account, which is a free bank account for teens with a debit card, no minimum balance requirements, and top-rated mobile banking tools.

This checking account, which is open for all kids aged 8 and above, pays interest on any balance. An important feature of it is that it allows one to advance to a teen account with a debit card. Also, parents need not have a Capital One account, as they can link to MONEY with any account.

Capital One currently pays 0.30% APY, which can be considered on the lower side, but the absence of a minimum or maximum balance makes it rather attractive. Also, parents and their kids have separate login accounts, which in turn allows kids to manage their own money, while at the same time giving parents adequate control of the account.

FamZoo

FamZoo is a virtual family bank (a private online family “banking” system) designed to help parents build good money habits for their children.

Parents can manage their kids’ funds in either IOU accounts, prepaid card accounts (subject to eligibility), or both.

An IOU account is one that you hold on behalf of your kid. Automated transactions made by parents are reflected in a child’s IOU account.

Likewise, for payments or expenditures incurred by the child, the money is deducted from the IOU account. A prepaid card account holds money for your kid and helps you keep a tab on your child’s expenditure and other transactions.

You are charged a $5.99 recurring monthly fee for either the IOU accounts or prepaid card accounts, or a combination of both, with a choice of cancellation anytime you want. Also, you can pay for more than one month(non-recurring) if you wish.

Alliant

An Alliant Kids Savings account is an online joint account for kids with no fees, which kids aged 12 and below can open and operate with a parent, grandparent or guardian. The joint account holder must also be an Alliant member.

A nice feature of the account is that anytime the balance exceeds $100, Alliant pays a competitive 0.55% APY. The account can be accessed via a mobile banking app equipped with important features for both parents and children.

Parents can easily transfer money through automated recurring deposits into their child’s account, while the child can easily check the balance and deposit birthday checks.

Alliant also offers a teen checking account geared towards children aged 13-17 years. The joint account pays 0.25% APY and lets teens have their own debit card with daily spending and withdrawal limits.

The best thing about this account is that it pays 0.25% APY, while most teen checking accounts pay no interest at all. Other highlights include:

• no monthly service fees,
• free ATM transactions, and
• ATM rebates up to $20/month

Pen Air

The Level UP Minor Account Program offered by Pen Air Federal Credit Union is known for its savings incentives. The savings account offers cash bonuses when a particular savings milestone is reached.

The account is meant for newborns to 18 years old, and allows your children to open a savings account with a $25 deposit.

As soon as the account is opened, a cash bonus of $10 is offered. The firm will also pay your child a cash bonus of $20 when the account balance reaches $250 for the first time, and another $30 if the balance reaches $500.

Pen Air also offers an accompanying Level UP Spending Account, meant for children aged 8 years and above. This account offers a uniquely designed debit card, along with an easy-to-use mobile app with parental controls. There are no joining fees, but you need to hold $25 in member savings account for the period you are a member of the credit union.

Can you Gift Money to a Child’s Account?

Most parents help out their children. This is corroborated by a 2018 Merrill survey, which reveals that close to 80% of parents support their adult children, which includes paying for their cellphone bills, wedding, higher education or mortgages.

In 2022, parents can gift up to $16,000 per year per child without having to report it to the IRS.  For example, if there are two children and two parents in a family, then each parent can give $16,000 to each child, which in total amounts to $64,000.

The parents are not required to file a gift tax return for this amount in 2021. However, anything above and beyond this limit requires documentation with the IRS. It also means parents have to use a portion of their lifetime gift tax exemption which currently stands at $11.7 million.

Opening a bank account for kids: Tax implications          

It is always advised to open a bank account for children as it will teach them valuable lessons about the importance of saving and spending money wisely. However, there are tax implications for money put into a savings account for a child.

Children like adults are liable to pay taxes on interests earned in a savings account, but everything is dependent on how much money is earned.

As per IRS rules, a child having more than $2,200 in unearned income, is supposed to pay taxes the parent’s tax rate or their own—whichever is higher. Then there is also the option of parents reporting the interest earned on their child’s saving account as their own. However, this could result in higher tax liability.

Also, money put into custodial accounts belongs to the child, though it is managed by an elder till the child becomes an adult and assumes full control of it. It means any interest earned or growth is taxable at the child’s rate, which is lower than what an adult has to pay.

Under UGMA and UTMA, a child younger than 14 has to pay no taxes on an amount up to $950. For the next $950, the child tax rate is applicable. Beyond that, the child is taxed at the parental rate. For children aged 14 and above, income and capital gains are taxed at the child’s rate.

Summary: How Old Do You Have To Be To Open A Bank Account?

Financial literacy for kids begins earlier than most parents expect or realize. A University of Cambridge study shows that the majority of the children start understanding the value of money by the age of 7.

They generally become aware of how money is earned and how it can be used to purchase goods and services. The study also found out that kids despite grasping the basic concepts of money, somewhat struggle to differentiate between luxuries and necessities (a problem many adults face as well).

Opening a bank account in your child’s name provides you with hands-on experience in money management. And since kids cannot have their own account unless they turn adults, their parents need to open an account on their behalf and link it with their own banking account.

This in turn offers parents greater control over how the child spends or saves the money received. Almost all kids accounts and debit cards come equipped with features that allow parents to keep tabs on their children’s spending habits. Some also offer interest irrespective of the amount in the account and provide savings and investing tools to help children learn the basics of saving, spending, and even earning money.

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