It keeps your money safe and gives you a convenient way to make purchases with a credit or debit card. If you think that it’s time for your child to manage money, you may want to set up a bank account for him.
This way, he can watch his account grow and learn the pros and cons of saving and spending money for various financial needs. However, certain requirements must be fulfilled for an individual under the age of 18 before opening a bank account.
In this article, we will discuss the qualification, information, and paperwork needed to open the account, including how old you do you have to open a bank account.
How Old Must You Be To Open Bank Account?
The minimum age in the majority of banks is 18 years old. However, a kid under 18 can still open a joint account with a person who is over that age, which is usually a parent or legal guardian.
Before opening an account for a minor, you must figure out the goals. You may want to open an account for your kid to understand money, save money or spend money wisely. If you figure out the goal, it will be easy for you to comprehend which account fits best for you and your kid’s needs.
If you want to open a separate account for a minor, it will be challenging. You need to sign an agreement, and it can be complicated. Banks are mainly reluctant to open accounts for individuals under the age of 18 years, and often, state laws and corporate policies don’t allow it.
Bank Accounts for Minors
Below are different types of bank accounts with basic details:
If you want your child to use the account, make deposits, withdrawals, purchases, and use a debit card, a joint account is a good choice.
Most of the time, these are labeled as “bank accounts for kids” or “teen checking accounts” (usually for 8-year-old kids or older).
Other names are:
- Looney Tunes Account
- Student Checking
- Youth Savings Account
- Savings Club
Joint account benefits in the sense that it keeps the parents aware of their child’s activity in the account. It sends setup messages and email alerts about their child’s spending habits. This gives them a right to suspend access to debit cards in case of overspending.
This one is under the control of an adult, who manages, saves, and invests on the child’s behalf. Unlike joint accounts, a custodial account doesn’t allow the child to take withdrawals or make purchases. Only the adult has the authority to manage the custodial account. However, the money in the account belongs to the child.
Once the child reaches the age of 18, the child becomes the owner of the money and can use it for anything he wants.
You can also go for educational accounts to manage educational costs with the benefit of tax exemption to some extent.
529 College saving plans: It allows you to save and spend money on educational expenses without tax. This includes higher education costs and $10,000 per year for K-12 tuition.
Coverdell Education saving account (ESA): It also helps you pay for educational expenses with tax exemptions. However, not everyone can be eligible for ESA. Also, the yearly contribution limit is relatively small. So you need to start early and prepare other sources of money.
If you just want to make payments with plastic, prepaid cards are another option. But prepaid cards are expensive, and they don’t offer anything extra that a checking account can’t offer. Since bank accounts for children often have no fee, a bank account is better than a prepaid option.
How can you Open a Bank Account For a Minor?
When you want to open an account for a minor, you need to look for the minimum deposit limit, monthly fee, and ongoing balance requirements.
The monthly fee is important because it can gradually finish your savings. So, always check the account fee before.
Compare the services of different banks and choose the best.
You can apply for an account in person, by phone call, or online through their website.
Just like with any other account opening, you need to provide some personal information, which is:
- Full name
- Social Security number or tax ID number
- Government identification details
Make the first deposit into your account and activate the debit or ATM card.