If you think it’s never too early to start saving and like the idea of kids getting real world money experience at a young age, you may be wondering how old you have to be to open a bank account. A child generally can open a bank account at any age — as long as a parent or guardian agrees to be a joint account holder.
The rules for when minors can open a bank account on their own, however, can vary from state to state. Typically, an individual account holder must be 18, or the age of majority in their state. The rules also can differ based on the type of bank account you want to open.
What Is a Bank Account?
“Bank account” is a broad term used to describe money that’s being held for a customer by a bank or some other type of financial institution. A bank account can offer someone a secure way to save and spend money instead of keeping a stash of cash at home.
There are many different types of accounts from which customers can choose, depending on their needs and goals. Understanding the terms and benefits of each could help you make a more informed choice. Some common options include:
• Savings accounts: A savings account allows you to safely stash funds for the future, but the money is still available when you need it. (Although there may be a limit on how many withdrawals you can make each month without paying a fee.) Most savings accounts pay interest on the money you accumulate.
• Checking accounts: A checking account is another way to keep your cash secure, and it offers even easier access to your money because you can use a debit card or checks to make purchases, pay bills and make withdrawals. You may not earn interest on a traditional checking account, however, and you might have to maintain a minimum balance to avoid certain fees.
• Cash management accounts: A cash management account is a hybrid product offered by nonbank financial institutions. Though not technically a “bank account,” a cash management account combines the flexibility of a checking account with the ability to earn interest like a savings account.
How Old Do You Have to Be to Have a Bank Account?
There isn’t a federal law that says you have to be a certain age to have a bank account. However, each state can have its own regulations regarding accounts for young savers and, depending on the state, financial institutions also may have the ability to set their own rules.
If you’re interested in opening an account and are unsure of age requirements, you may want to contact a few different financial institutions to ask if they have an account that suits your needs.
Why Open a Bank Account?
While it’s certainly possible to store your money in cash — and many people do — there are several reasons why it can make sense to open a bank account.
Keeping your savings at home can put your money (and you) at risk. When you deposit your money into a bank account, the financial institution takes responsibility for it. So, you won’t have to worry about your hard-earned savings being lost, stolen or damaged in a fire or flood.
If you deposit your money in a bank, your funds will be insured by the Federal Deposit Insurance Corporation (FDIC). And if your money is in a credit union, it’s insured by the National Credit Union Association (NCUA). Financial institutions that offer cash management accounts typically sweep their customers’ money into accounts at partner banks, which means those funds are then protected by FDIC insurance.
If you open a savings account, a cash management account or some kinds of checking accounts, your money can earn interest. The more you save, the longer you save and the higher the account’s interest rate, the more you can earn and grow your money.
Keeping your money in a checking or cash management account can make it safer and simpler to pay for things, such as with a debit card, checks and digital transfers. Plus, you can set up direct deposits for your paychecks or any money received regularly.
Managing Your Money
With a bank account, you can check your account balance and the bank’s record of transactions online at any time. And many accounts come with apps that can help with budgeting and tracking your saving and spending.
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What Will I Need to Open a Bank Account?
Whether you plan to open a bank account online or in person, you can expect to be asked for identification and certain types of documentation. Most account applications are straightforward and easy to complete; still, you may save some time by confirming that you meet all the criteria for a particular type of account before you get started.
You may have to provide the following information and documents when you set up a bank account:
• Government-issued photo identification, such as a valid driver’s license or passport
• Social Security number or individual taxpayer identification number
• Contact information, including your full name, address and phone number
• Proof of address, such as a utility bill or some other type of official document with your current address (you can print an online statement if you’ve gone paperless)
• Student accounts may require proof of school enrollment, such as a student ID or acceptance letter
• Joint account holders should be ready to provide required documents for all parties named on the account
In addition to the above items, a minimum deposit to open an account may be required as well.
💡 Recommended: How to Open a Bank Account
Can a Minor Open a Bank Account?
Usually, you must be 18, or the age of majority in your state, to open a bank account without a parent or guardian. But there are ways in which a minor can have his or her name on a bank account. Some popular options include:
A custodial account is an account an adult opens on behalf of a minor. The money held in the account belongs to the minor but is controlled by the custodian — usually a parent — until the minor reaches the age of majority (typically 18 to 21, but it may vary by state). There are a few different types of custodial accounts, including savings, educational savings and investment accounts.
With this type of account, the minor won’t be able to access funds on their own, and they won’t be issued an ATM card. Generally, a custodial account changes over to an individual account when the child reaches adulthood.
A joint account lists both a minor’s name and an adult’s name as co-owners, and they have equal control of the account. If the goal of the account is to help a minor learn financial responsibility or to give them control over their own money — but with an adult’s guidance — this might be the right choice.
Depending on the child’s age, you may want to start with a joint savings account. Or, you might decide to look into the perks of a teen or student checking account that offers youth-friendly benefits (like low minimums and fees), and a debit card and/or checks for purchases and withdrawals.
When minors reach the age of majority, they may choose to keep a joint account, but they also may want to transfer the account to just their name. As another option, they can open a new, individual account that better suits their current needs.
What to Consider When Choosing a Bank Account
Probably the most important thing to consider when choosing a bank account for a minor is how much control they would have over the funds. That could help you decide between a custodial account or joint account, and a savings account vs. a checking or cash management account.
Some other things to keep in mind as you compare accounts include:
If you and/or your child expect to make frequent deposits and withdrawals, you may want to be sure the account comes with access to a large ATM network, online banking or a convenient branch location.
Many banks and credit unions have minimum balance requirements for savings and checking accounts. If you and your child would struggle to meet that threshold, you may want to look for an account that has a low or no minimum balance requirement.
Earning interest isn’t necessarily a top priority with a bank account, but every little bit helps. Learning how interest works and watching their money grow can be educational and motivational for young savers.
Does the financial institution have a reputation for reliable and helpful customer service? This could be important if you have questions or need help with disputing a transaction.
Fees can quickly eat away at a teen’s hard-earned money, especially if they’re using a non-network ATM to make withdrawals. You may want to find accounts that offer no or low monthly fees, ATM fees, overdraft fees and non-sufficient funds (NSF) fees.
If you prefer digital banking to visiting a brick-and-mortar branch, be sure to check out the account’s online and mobile platforms. It’s likely both parent and child will be using these tools on a regular basis.
Though having a checking or cash management account can be a big step toward financial independence, it might be helpful to put some parental controls on a minor’s account. Many accounts allow parents to monitor their child’s transactions so they can offer timely guidance.
Will the money in the account be insured by the FDIC or NCUA? Will your personal and financial information be protected from unauthorized access with two-factor or multi-factor authentication? If one of your reasons for using a bank account is to keep your money safe, these can be important questions to ask.
You generally can open a bank account at any age — although minors typically must share a joint account with a parent or guardian until they turn 18. There are several types of accounts that kids and their parents might consider depending on their needs and goals, so it’s important to do a little research before choosing an account.
For example, you might want to prioritize the account’s APY (Annual Percentage Yield) if you hope to grow your money. But if you’re going to use the account to make purchases and pay bills, or you expect to make cash withdrawals regularly, you might want to focus on low fees and easy access to a wide network of ATMs.
If you’re searching for an option where you can earn interest and avoid overdraft fees, consider a high-interest bank account with SoFi. The checking and savings account offers a competitive APY — plus you’ll have access to a network of 55,000+ ATMs.
3 Great Benefits of Direct Deposit
1. It’s Faster
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.
2. It’s Like Clockwork
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.
3. It’s Secure
While checks can get lost in the mail – or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet