How old you gotta be to open a bank account

Research shows the road to financial well-being starts at a young age. It’s when people begin developing skills around money they’ll need as adults.1

And for most teenagers, financial lessons come from their parents.2 There’s plenty you can do to teach your teen about money. And helping them open their own bank account could be a place to start.

If you think they’re ready, opening a bank account can be a great way to explore the ins and outs of earning, saving, spending and planning for the future. Here are some topics to help get the conversation rolling:

Features to explore in a teen checking account

Since minors generally can’t open bank accounts by themselves, you’ll typically need to be a joint owner of the account, which may actually be a good thing. It’ll give you the chance to compare banks and find features that are important to both of you. You can discuss pros and cons, make compromises and even adopt some new habits on this financial journey you’re taking together.

Maybe your teen wants a bank account that’s free of fees and doesn’t require a minimum balance because they’re just getting the hang of this money thing. That’s not too hard to find. But maybe you’re mostly interested in tracking their spending. An issue like that may be worth a discussion, so your child understands where you’re coming from.

For instance, there are joint teen checking accounts that allow you to receive alerts every time your child makes a transaction. But should you? When it comes to monitoring your kid’s checking account, privacy parameters will be up to you. Navigating these options together will keep the lines of communication open.

With banking apps, everything from money transfers to mobile deposits can be done in minutes. However, impulse purchases with the swipe of a debit card are just as quick. This can be an opportunity to talk about the difference between “wants” and “needs.” For most people, finding a balance takes time, and managing a bank account is one way to practice.

A teen checking account can even earn a little interest. If your teenager earns money on their own, they may be able to grow their money with interest.

Together, you can compare rates on checking accounts, savings accounts and even longer-term investment options like CDs. It can be an eye-opening exercise to see how your dollars may grow, depending on where you leave them.

Opening an under-18 bank account

Once you find the right bank account, you’ll likely need to provide details for you and your teen such as address, dates of birth and Social Security numbers.

While some financial institutions require you to be a parent or legal guardian, others allow anyone over 18 to be the joint account holder.

And since most parents swear that time actually flies, you’ll want to discuss what happens when your child turns 18. Will you remain joint account holders of your teen checking account or go your separate ways? Hopefully, you can make that decision together, but be aware that some banks will close or convert teen checking accounts when your child becomes an adult. So, you’ll want to ask your bank about its policy.

Bank accounts, budgets and bowling nights

As with most major endeavors, mastering personal finance takes trial and error. As your child learns to monitor their cash flow, you can help them create a budget. How much will they spend? How much will they save? What kinds of experiences or big purchases will they plan for?

Teens, just like adults, are more likely to enjoy money management if the process is fun—and there are tangible payoffs (like wings at the bowling alley with friends).

At the same time, learning to save and watch your balance grow can feel pretty good, too. Putting goals in order of importance, and even scratching others off the list, can build confidence around managing money wisely.

From saving for a first car to paying off student loans to buying a starter home, it all starts with basic banking skills. And practice, as they say, makes (something close to) perfect.

This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

1. The journey to adult financial well-being (undated). Retrieved January 6, 2022, from https://www.consumerfinance.gov/consumer-tools/educator-tools/youth-financial-education/journey/. 

   It’s never too early to start learning about personal finance, but how old do you have to be to open a bank account?

   In most banks, the age requirement to open a bank account is at least 18 years old. Anyone younger is considered a minor and will generally need a legal guardian to be the joint account holder. To open an account for a minor, you must be a signer.

   Table of contents

   There is no federal law preventing a minor from opening a savings account. But in most places, they can’t do so on their own. This is because a banking relationship is governed by state contract laws, and minors don’t have the legal authority to enter into a contract on their own.[1]

   Most states allow a parent or guardian to open a bank account for a minor. As of 2016, however, some limits were in place in Texas, Oklahoma, Missouri, West Virginia, Florida, and the District of Columbia. The practice was not permitted in Massachusetts, New Hampshire, and Wisconsin.[2]

   Banks also have their own requirements. Each bank’s eligibility requirements are different, but there are a few commonalities: The adult account holder must be a U.S. citizen 18 or older with a government-issued ID. (The adult doesn’t have to be a parent or guardian; they can be any family member or even a friend of the family.) Typically, these types of accounts are called student checking accounts or teen checking or savings accounts.

   Bank accounts with or for minors fall into three categories: custodial, education, and joint accounts.

   

   ###Custodial accounts

   A financial account that is opened and controlled by someone over 18 for a minor is called a custodial account. These come in two forms:

   • UGMA accounts, governed by the Uniform Gift to Minors Act, mainly include financial assets such as stocks, bonds, and mutual funds.
   • UTMA accounts, governed by the Uniform Transfers to Minors Act, cover a wider range of assets, including real estate, art, jewelry, etc.

   The minor takes control of the account and becomes the account owner when they come of age, but don’t have access to the money until then.

   These accounts, known as 529 plans, help pay for education expenses from kindergarten through college. Withdrawals are tax-free as long as they’re used for eligible expenses. They’re investment or savings accounts with no income or contribution limits, but the parent controls the accounts.

   Joint accounts

   With a joint account, you and your child share an account and both have access to it.

   These savings accounts can help pay a child’s future education expenses or teach them to save for another goal, such as a car or a rent deposit when they decide to move out, but the adult controls the account.

   Here are examples of what different banks have to offer:

   • Wells Fargo offers joint-ownership accounts opened in a minor’s name and accounts under the Uniform Transfers/Gifts to Minors Act.[3]
   • U.S. Bank allows you to open an account for a minor 14 years of age or older if you are both present, have valid ID, and can show proof of address.[4]
   • Capital One offers a MONEY teen online checking account that any child 8 and older can participate in as a joint account holder with a parent or guardian.[5] The bank also offers a Kids Savings Account with a 0.3% annual percentage yield (APY).[6]
   • Bank of America has a Minor Savings Account that offers an APY of 0.01% for children under 18 with joint account holders 18 or older. It requires a $25 minimum opening deposit.[7]

   The papers you need to open a bank account with or for a minor may vary for each financial institution. Whether you are applying at an online bank or a brick-and-mortar bank, most banks will ask you for the following:

   • Social Security number or Social Security card
   • Birth certificate
   • Government issued-ID (driver’s license)
   • Proof of address (utility bill or similar correspondence showing your name and address)
   • Minimum initial deposit

   In addition, you will likely be required to meet monthly balance requirements or maintain a minimum balance so the account doesn’t close.

   When the minor reaches the age of majority, which varies by state, they gain control of the account. The age of majority is commonly 18, but sometimes it can be 21 or older. Make sure to understand when the beneficiary, who in this case is the minor,can take control of the account and how long you can maintain custodianship.

   Should you open a bank account for your child?

   It’s helpful to consider the pros and cons of opening an account before you do so. Remember: You will be the signer and joint owner. If you’re not quite ready to open a bank account for your minor, you may want to look into other options like prepaid debit cards.

   

   Pros

   These accounts tend to be easy to set up and allow you to deposit as much money as you want, giving you flexibility with no penalties for early withdrawal.[8]

   Teaches kids about saving and money

   Access to a bank account can teach your child budgeting and money management skills. Some savings accounts designed for minors include educational materials, either via apps or pamphlets, that can increase their financial literacy.

   If you choose a checking account, it can provide your child with their first ATM card, debit card, or credit card. Having an account with your child can prepare them to begin building credit.

   Offers mobile banking

   Most banks now allow you to access your bank account online, which makes it convenient for you to be able to access or pay your child’s account within a tap of a button at all times. You may opt-in to receive notifications of fraud alerts, deposits, and spending alerts.

   Easy access of the account

   As mentioned above, you’ll be able to view or access your child’s account since you are the joint co-owner. Your child can withdraw the money at any time for whatever purpose they want, but they need your permission to do so.

   Cons

   There are some downsides to opening an account with or for your child, including fees and tax implications. You may have control over your child’s activity now, but once they turn 18 (or in some cases 21), the money will belong to them.

   Joint account fees

   Since you are the account co-owner, you are responsible for overdraft fees, monthly maintenance fees, bank account fees, etc.

   Tax and legal issues

   Any income or growth is taxable at the child’s income rate. If their interest, dividends, and other unearned income adds up to more than $2,200, it can trigger an unearned income tax for children.[9] In addition, if your child is saving for college, it will count as part of their assets when applying for financial aid, which could hurt their application.

   
   • Shop around for interest rates: Look around for the best interest rates and benefits. Consider the types of accounts that different banks offer.
   • Determine if you prefer an in-person or online bank: Will you be visiting a brick-and-mortar location or is that unimportant to you? If there is no brick-and-mortar location, what ATMs are accessible without fees?
   • Consider different types of bank accounts: Savings or checking accounts are available for minors, though setting up savings accounts for minors is more common.
   • Be aware of fees: Most accounts aimed at kids waive monthly fees. However, make sure to ask about all fees that could be charged to the account.

   Build money management skills early

   Opening an account for or with a minor can provide opportunities for them to learn about money and prepare for the future at the same time. A variety of accounts and programs exist, and they vary from one bank to another, so it is important to investigate your options and choose the best one for your child’s current situation and the future.

   Sources

   Jeff Smith is the VP of Marketing at Self Financial. See his profile on LinkedIn.

   About the reviewer

   Ana Gonzalez-Ribeiro, MBA, AFC® is an Accredited Financial Counselor® and a Bilingual Personal Finance Writer and Educator dedicated to helping populations that need financial literacy and counseling. Her informative articles have been published in various news outlets and websites including Huffington Post, Fidelity, Fox Business News, MSN and Yahoo Finance. She also founded the personal financial and motivational site www.AcetheJourney.com and translated into Spanish the book, Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP. Ana teaches Spanish or English personal finance courses on behalf of the W!SE (Working In Support of Education) program has taught workshops for nonprofits in NYC.

   Can I open an account at 16?

   You can open a teen checking account when your child turns 16. Teen checking accounts help teenagers learn how to check their balance, set up direct deposit, use ATMs, use a debit card, budget, and transfer money.

   What is the youngest age to open a bank account?

   Though a child can't open an account on their own until age 18, as the child's parent, legal guardian or grandparent, you can open what's called a custodial account. Custodial accounts are accounts that are opened by a responsible person (you) on behalf of someone else (your child).