How Old Do You Have to Be to Open a Bank Account?

Updated on January 6, 2024

At a Glance

  • Yes, minors can open bank accounts through custodial or joint accounts.
  • Custodial accounts are managed by a parent until the child turns 18, while joint accounts allow both the parent and child access.
  • Considerations include fees, minimum balance, and interest rates.
  • Opening an account teaches financial literacy and independence.

Having a bank account is essential. It is never too late to keep your money safe with a bank. This gives you the convenient option of making purchases with a debit or credit card as well.

However, it is difficult for individuals under the age of 18 to open a bank account. To open an account, you must sign a contract, and contracts signed by minors are tricky. State regulations and company practices differ, but most banks will not open accounts for those under 18 unless an adult accompanies them.

Can a Minor Open a Bank Account?

Yes, minors can open a bank account. However, there are specific terms to be kept in mind when a minor applies for one.

Opening a custodial account or joint account is one of the most popular ways to bring minors into banking. A custodial account is the child’s asset, but a parent handles it before the child reaches the age of 18. For a shared account, both the parent and the child have access, but the adult can monitor or restrict conduct, such as setting a limit on how often the child can withdraw money from the account by closely controlling it. These accounts are available at almost every financial institution, so all you have to do is find the bank you like most.

All types of accounts can be transferred over to the child’s name once they turn 18 years old.

Considerations When Opening a Bank Account for a Minor

First, you have to decide whether you want to open a custodial account or a savings account. Choose a contract that offers you a modest or no-fee structure, no minimum balance requirement, and a favorable interest rate. A good interest rate is necessary so the child can see the money set aside for their future grow and be aware of inflation.

Depending on your accessibility, you can even apply for online banks like Capital One MONEY.

Experience and Independence

No rule says minors should not learn how the banking system works. In some instances, children will consciously use bank accounts. Developing a secure relationship with money is a valuable life skill that teaches children to be independent and responsible.

A savings plan will assist your child in learning about economic concepts such as compound interest, various types of financial accounts, and how to handle money in daily life.

Saving and Planning for the Future

It is simple for parents to maintain accounts with future expenses in mind. You can teach your child about this on a simpler level. For example, if your child needs to save money to buy something they want, they may use their savings account to do so. The savings can even be for their future educational endeavors.

The terms of these accounts differ by state and bank, so contact your bank’s customer service department for more details.

Joint Accounts Are an Option

A joint account will suffice if the intention is for the minor to use the account to make deposits, transfers, and payments using a debit card. Apply for an account with at least one adult as a signatory. The account may be a standard joint account or one specifically for anyone under the age of 18.

The majority of accounts branded as “bank accounts for kids” are joint accounts that go by different names:

  • Youth Savings Account
  • Teen Checking Account
  • Savings Club
  • Looney Tunes Account
  • Student Checking

How to Open a Bank Account for a Minor

Here are the necessary steps to open a bank account for someone under 18 years of age:

  • Compare the services of different banks and credit unions before you find the one that suits you and your child best.
  • Gather your financial and/or official records, such as your child’s Social Security number, your driver’s license, your child’s birth certificate, and your proof of address. Keep them handy for when you apply for an account.
  • You may apply for an account in person, through a phone call, or over the internet. To open most accounts for minors, you will need to go to a nearby branch. However, there are a few institutions that allow you to apply online.
  • Make your first deposit into your account.
  • Activate the debit or ATM card after it arrives by mail.

To open a child’s bank account, the legal guardian must be 18 years old or older, and the child must be under the age of 18. However, some banks may have tighter age restrictions on children. While only children aged 13 to 17 can open a Wells Fargo Teen Checking account, those under 12 can open a Citizens Bank College Saver account.

Is it Possible to Open a Bank Account for a Minor Without Incurring Any Taxes?

Incurring taxes depends on certain factors like:

  • Savings Account: Your child will be required to pay taxes if they receive more than $2,100 in unearned income each year, plus debt and dividends.
  • Trust Fund: A trust fund’s beneficiary is responsible for paying taxes. When trust funds are allocated, they are assessed as revenue, with taxing rules varying, depending on the extent of the trust and changing tax laws. If you’re thinking of creating a trust fund, consider speaking to your accountant about how it will be taxed.
  • Custodial Accounts: An UGMA or UTMA account that earns more than $2,100 in unearned interest in a year would almost certainly have to pay taxes.

What Happens to a Bank Account When a Minor Turns 18?

When a minor becomes an adult, all money in the custodial account becomes theirs. They may do whatever they want with the money since they are an adult, including investing in college or withdrawing it all and spending it in one go.

Read More

Conclusion

When your child has a bank account, it helps them learn how to set financial targets and make responsible financial choices. Before you pick a bank or credit union, discuss their savings accounts with your child. Ascertain that your child is mature enough to handle and be interested in saving money.

Your child might have some questions for you to answer that will help you narrow down your options. Having their own real savings account will make your child feel independent and mature. You could also motivate them to learn more about money and cultivate stronger financial practices while they are still young.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.