The Reason Why Your Kids Need a Bank Account

When did you begin your financial education? Chances are, it wasn’t during your early childhood. It’s more likely that you started learning about money management at a later stage in life, perhaps in your mid-teens, or maybe you’re still navigating this aspect without much guidance. However, instilling good money habits should ideally begin at a young age.

Opening a bank account for your child serves as an excellent introduction to these habits. Experts often recommend doing so around the age of six, involving them in every step of the process. Take the opportunity to explain the associated fees and demonstrate how interest can help their money grow. A bank account serves as a platform to introduce various money-related concepts.

The encouraging news is that many banks offer youth accounts, often with minimal or no fees at all, making it easier for children to start their financial journey early.

Although children under 18 can have accounts in their own names, an adult is required to open them. These accounts are typically referred to as joint checking or savings accounts. Selecting the appropriate account is crucial, with options tailored for younger children or teenagers, as well as those emphasizing savings or serving as introductory checking accounts for kids with part-time jobs. It’s essential to consider that different banks and states may impose varying rules regarding the age of the minor on the account, necessitating thorough research.

Typically, you can open these accounts either online or in person. The specific requirements may vary between banks, but you’ll generally need your child’s Social Security number, passport, or birth certificate, along with your own identification.

While it might seem convenient to open a children’s account at your current bank, it’s wise to consider several factors to find the best option. Before making a decision, ask yourself the following questions:

  1. Is there an initial deposit requirement?
  2. What are the associated fees for the account?
  3. Is there a minimum balance requirement to maintain the account?
  4. What is the interest rate for the savings account?
  5. Are additional features available, such as checks, debit cards, or online banking?
  6. Are there options for transferring money directly into your child’s account?

If there are other features important to you, ensure to inquire about them before finalizing your decision.

Here are some the best checking and savings accounts we found for kids aged 17 and under.

This account is designed for high school students aged 13 to 17 and must be jointly owned by both the student and their parent or guardian. It is required to be linked to the parent or guardian’s Chase account. Upon reaching the age of 19, the account will transition to a Chase Total Checking account.

There is no minimum deposit requirement, and no daily balance or monthly fee associated with this account. Additionally, there is an added incentive for students heading to college who are at least 17 years old. They may qualify to receive a $100 bonus for opening a new Chase College Checking account. This offer can be redeemed online, and the bonus will be received after following a few simple instructions.

This account operates under the Uniform Transfers to Minors Act (UTMA), facilitating the transfer of high-value gifts such as money or real estate to a custodian for the benefit of a minor until they reach legal adulthood. While these accounts are tax-free for the minor until they assume ownership, the assets are considered part of the custodian’s estate and are subject to taxation accordingly.

The PNC account is designed to educate children about finances through Sesame Street. The themed learning center offers an interactive experience where kids can learn about goal setting, saving, sharing, and spending, with money tips provided by beloved characters like Elmo.

Automated savings can be set up with this account, allowing for easy distribution of regular allowances or savings contributions to your child. Following the required initial deposit of $25.00, there are no fees associated with the account. Additionally, there is no minimum daily balance requirement, and as long as the account holder is under the age of 17, no fees are applied.

Bank of America presents two distinct options for children’s accounts: the Minor Savings Account and the Custodial (UTMA) Savings Account.

The Minor Savings Account grants the child full access to their funds and allows for automatic transfers. This account is FDIC insured. Conversely, the Custodial Savings Account restricts minors’ access until they reach 18 years old, although automatic transfers can still be arranged, and it is also FDIC insured.

The Minor Savings Account is jointly owned by the child and their parent or guardian. It requires an initial deposit of $25.00, with no minimum daily balance necessary while the child is under 18. Upon reaching 18, the account is converted to a BoA Advantage Savings account, subject to regular fees.

In contrast, the Custodial Savings Account designates the minor’s parent as the custodian. The initial deposit is higher at $100, and it mandates a minimum daily balance of $500 to waive the account fee. Failure to maintain this balance incurs an $8 monthly fee.

This savings account provides complimentary online transfers between Wells Fargo accounts. It also offers free online statements, which can be utilized to educate your children about money management. The account is jointly owned, necessitates an initial deposit of $25.00, does not require a minimum daily balance, and does not incur a monthly service fee for individuals under the age of 18 (19 in Alabama).

It’s always beneficial to explore all your options. Consult your local credit union to inquire about their offerings for minors. Many credit unions provide at least one type of youth account. By taking the time to compare financial institutions in your area, you may discover lower fees or higher interest rates.

While depositing your children’s money in a piggy bank may appear convenient, the advantages of opening a bank account are significant. A bank account can instill in your children the value of money, educate them about compound interest, and demonstrate how their funds can multiply over time. As a parent, you can guide them in saving towards significant goals. Introducing your children to banking is an excellent initial stride in their financial education. Ideally, it fosters positive budgeting habits that will contribute to their financial responsibility as they mature into adulthood.