Do you remember how old you were when you opened your first bank account? In 2022, 39% of children ages 8 to 14 in the U.S. owned a savings account. While opening a bank account for a minor might seem hard, the process is pretty simple.
Can minors open a bank account?
Minors can open bank accounts, but they need help from an adult. While most financial institutions will people younger than 18 to open an account, there also needs to be a parent or legal guardian on the account who is 18 or older. While an adult must be included on bank accounts, a minor can still manage their deposits and withdrawals, depending on the type of account, to feel in control of their funds.
What to look for in a bank account for a minor
Just like when adults consider their options for bank accounts, there are features to look for when considering a bank account for a minor.
No one likes fees, but on some accounts, they are inevitable. It’s ideal to find an account with no fees because, depending on their age, your minor’s bank account probably will only see small deposits and withdrawals. An account that has high fees would likely take a significant portion of their money.
Look for accounts with low minimum account balance requirements. If the kid in your life will use their bank account to deposit allowance and birthday money, chances are their balance won’t be in the thousands. So keep an eye out for accounts with low or no minimums to help save them cash. Be sure to check the minimum balance required when you open the account so everyone is aware.
Smart banking tools
To effectively track your balance and fees, you need smart banking tools. First, look for a minor banking account that has either an app or mobile banking that makes it easy to stay on top of account transactions. Most smart banking tools help you set budgets and alerts on spending and provide steps to help prevent overdrawing your account. These tools can help minors learn how money works while preventing them from overspending.
Who doesn’t love a debit card? Not only can they be used in most places, but they also give you access to ATMs for withdrawing and depositing cash. This can be especially useful if the minor receives cash from odd jobs or an allowance and wants to deposit their funds quickly.
Parental monitoring tools
Monitoring the account for a minor is critical. A joint account is ideal for parental monitoring as you both are considered account owners and have equal access. If you are on a joint account with your minor, you can set up account alerts to alert you if the minimum balance has been reached or a transaction is over a set limit.
These monitoring tools help ensure they aren’t spending all the money in the account, especially if you have added them to an account where you have added most or all of the funds.
Steps to open a bank account for a minor
Opening a bank account for a minor is easy, but there are a few steps.
Choose a bank
While there are many options for opening up a bank account for a minor, you have to find the bank that works best for you. When choosing a bank, consider fees, balance requirements, and accessibility. For example, will the minimum balance be hard to maintain? Does the bank have a branch close to your home so you can quickly deposit money into the account? This is particularly important if the minor is older and likes to deposit their funds often.
Think about whether the requirements to open an account are easily obtainable for you and your family. Is there someone who can be the parent or guardian on the account? Is it possible that a different bank does not have this requirement? Consider all aspects of opening the account just as you would when opening an account for yourself.
Select the type of bank account
Now that you have chosen a bank, you want to consider the type of bank accounts it offers and what is most important to you and your family. Most banks provide a traditional checking or savings account, but other options exist. For example, you could open a custodial account that would be more focused on investment and savings. You could also open a joint account, which means you and your child would have equal access. In some cases, you can open multiple accounts. First, determine everyone’s goal for the account, which will help you choose the best option.
Collect your documents
Some standard documents are required to open an account for a minor. The adult will need government-issued identification, and some banks will also require a photo ID for the minor. This could be a school or state-issued ID or passport. Sometimes you need a Social Security card or birth certificate. Call the bank or look online before opening the account so you know what documents you need to open the account.
Follow your bank’s instructions
Now that you have decided what type of account you want to open and have all your documents together, follow the bank’s instructions. If you open the account online, be prepared to wait a few days before accessing it. If you decide to go into the branch, you might have access sooner and, in some cases, get a debit card that day. Whichever option you choose, follow the steps and be patient with the process.
Monitor the account
After the account is open, monitor it to ensure you are meeting the requirements such as not falling below the minimum balance. You can use online banking, mobile apps, banking by phone or by visiting the branch to check account activity. Find a system that works best for you and your new account owner to ensure everyone stays on top of the account and its transactions. Some accounts allow you to set alerts to notify you when you hit the minimum balance threshold, but also make a habit of reviewing statements with your minor so you both understand what’s happening with the account. It is a great learning opportunity.
Types of bank accounts for minors
Minor bank accounts are not limited to checking or savings — you have other options.
A traditional checking account typically has a low or no balance requirement, making it easier for minors who don’t have much money. In addition, they will typically get a debit card. A parent or guardian will likely be added to the account.
Savings accounts are great if the primary goal is to watch your money grow. Some savings accounts allow provide an ATM card to allow you to quickly deposit or withdraw funds, but think about whether it’s something you really need. These accounts likely have a low or no minimum balance requirement. Interest rates vary, but even with a small interest rate, your kiddo can still have fun adding money to a safe place and watching it grow. Like other accounts set up for minors, a parent or guardian must be added to the account in most cases.
Joint accounts are different from minor savings and checking accounts. With a joint account, both account owners have equal access. Adding a minor to a joint account means that both the adult and minor can deposit and withdraw money as they choose. You may be eligible for a high-yield checking account if you open a joint account because you likely can carry a larger balance. The adult on the account does not have to be a parent or guardian. A joint account allows the adult to set spending limits and monitor outgoing funds. This could be a good option for an older child with a job that directly deposits their paycheck into the account.
Other types of bank accounts
You may want to consider types of accounts other than checking or savings if your primary goal is to create a future savings plan for your child rather than teach them money management.
For example, you can open a certificate of deposit (CD) that pays a fixed interest rate for a preset amount of time. You can get a CD ranging from a few months to seven years. Once you select the CD terms and choose the amount, the money sits there and grows. While there aren’t many teachable moments with this method, this is a great way to save for your child.
You could also open a money market account for a minor. A money market account is excellent if you want to grow your money with less risk and in a shorter time. Some money markets give you the flexibility of a checking and savings account but tend to have higher minimum balance requirements.
There are many investing account options to help you save for a minor. A 529 college savings plan can help you save for education expenses. You also can open a Roth individual retirement account (IRA). While a Roth IRA is typically used for retirement, it can be a nontraditional way to save for college or beyond but is riskier than a traditional savings account. You could also consider a Uniform Transfer to Minors Account (UTMA) or Uniform Gifts to Minors Account (UGMA). These investment accounts are more involved but allow you to transfer properties, investments, and royalties to a minor. These are also risky but can yield great investment results for a kid’s future.
You are never too young to save
Opening a bank account for a minor might seem silly, but it can be helpful. As long as they have a parent or guardian on the account, anyone under 18 can open an account that best suits their needs. You want to ensure that the minor’s bank account has all the features to help them stay on track while giving an older kid a chance to feel some financial freedom. Make the decision about what type of account works best for everyone because you aren’t limited to just a checking or savings account.
What’s the minimum age to open a bank account?
In most cases, you must be at least 13 years old to have a bank account in your name. If you open a bank account at 13, you will still need a parent or guardian on the account until you are 18.
What documents are required to open a bank account for a minor?
The minor will need a photo ID. It can be a school or state ID or a passport. They will also need their Social Security card. The adult who will be added to the account will also need two forms of ID, including a photo ID.
How much money can be deposited in a minor’s bank account?
The initial deposit can vary between banks, but sometimes the minimum required when opening an account can be as low as $10.