Credit unions

Back when most of us were younger, we didn’t discuss money. You probably had no idea how much money your parents made. You didn’t care if your sneakers cost $5 or $50. And unless you were being chastised for leaving lights on (because electricity was not free!), you didn’t think about household bills. 

If you received an allowance, you rode your bike to the candy store and spent it promptly. Spare quarters went toward Pac-Man or Galaga. If you ran out of money, you couldn’t call or text your mom and ask her to reload funds onto your debit card. That was it until next week, or at least until the Tooth Fairy or Good Report Card Gods deposited a few more dollars into your piggy bank. 

Things seemed simpler then. Today’s parents take a more active role in teaching kids about money. And we’re left trying to figure out the right age to let our kids open a bank account. 

The Right Age to Open a Kid’s Bank Account: Factors to Consider 

Some banks and credit unions offer bank accounts and debit cards to children as young as 6 years old. While some children that young may be old enough to carry a debit card (especially if you use features like parental locks to limit the purchases they can make), other children aren’t ready until they’re in their teens. A lot of factors should influence your decision about your own child. 

Age of the Child

You wouldn’t give a toddler a debit card. But an older child or teen may be well equipped to manage a spending account, which is like a traditional checking account with a debit card instead of paper checks.  

To determine whether your child is old enough to have a bank account, consider these questions: 

• Do they understand the concept of money? 
• Do they have income (such as an allowance or birthday money) to place in an account? 
• Are they mature enough to make decisions about what they might like to buy? 

Children as young as newborns can have a college savings account, and little ones may enjoy watching their money grow in a custodial savings account, which is an account a parent or guardian oversees on the child’s behalf. 

Sometime around middle school, your child may be ready to start learning about money management and get their own spending account with a debit card. 

Financial Responsibility & Understanding

Although many banks allow children as young as 6 years old to get their own debit card, lots of kids don’t understand how to use it until they’re slightly older. Your child requires both understanding of banking basics and some sense of responsibility surrounding money. 

Don’t expect 6- or even 12-year-olds to know when to save money or how to evaluate when a potential purchase is a good deal. They will learn these concepts as they use their debit card. But your child should have some understanding of how much things cost — and how money works in general — before they get a spending account of their own. 

Purpose of the Account

Think about the reason you want to open an account for your child. Do you want: 

• A quick, secure, and convenient way to give your child money? 
• To teach about savings and investing? 
• To teach the basics of banking? 
• To help them save for college? 

Your reason for opening the account will drive your choice. 

It’s never too early to open a custodial account to save money for college or a first home. You can teach your child to save 10% to 50% of all birthday or holiday cash gifts they receive and show them how the interest builds. 

Many parents open a spending account for their child for convenience’s sake. If your child frequently needs money to go out with relatives or friends, it’s convenient to empower your teen or tween with their own debit card. 

Similarly, if your child earns an allowance and you want to start teaching them how to manage their money, choose a bank account tailored to teens and tweens with an easy-to-use mobile app. Some accounts, such as Chase, GoHenry, and Greenlight, allow you to assign chores and transfer money into your kid’s account when they complete the chores. 

Some financial technology (fintech) companies, like Cash App and Copper, even offer your child a door into investing and cryptocurrency.

If your primary goal is to teach your children how to save, look for a bank like Bank of America, that allows kids to round up their debit card purchases and put the difference into a high-yield savings account.

Some banks, such as Ally Bank and Capital One, allow your child to put money into different subaccounts for various purchases. They can set aside long-term savings in one subaccount, save for a larger purchase like a bicycle in another, and even set aside money for friends’ birthdays or Mother’s or Father’s Day gifts as they get older.  

Parental Involvement

Until the child becomes a teen and has learned some money sense, you can closely monitor their spending. Many kids checking accounts allow you to put limits on ATM withdrawals, debit purchases in general, and debit purchases in certain spending categories. Most also allow you to receive alerts when your child makes a purchase or withdrawal.

For instance, if I give my son $20 to treat himself and his friends to pizza on a sunny Saturday, I can change the settings in the app to ensure he can only spend the money at restaurants. 

Your Financial Means

If you give your child a bank account or a prepaid debit card, you want to ensure you (or they) can fund it. Until they’re old enough to hold a job, they can use holiday or birthday gift money or you can give them an allowance. If you’re giving them an allowance, make sure it’s an amount you can afford weekly or monthly, even if it’s just $5. 

Risks & Considerations

Risks exist when you open a debit card for your school-age child. 

• They might lose the card
• They might spend all the money too quickly and realize they don’t have money to buy something they really want
• They could lose money on investments 
• A kids’ debit account could charge fees, costing you money 

However, none of these contingencies will spell financial ruin for you or your child. Rather, they will learn important lessons from the experience. 

Online Banking Security & Bank Safety

When you’re choosing a bank for your kids, you should look for the same protections you expect from your financial institution: 

• Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration insurance
• Ability to turn the debit card on and off in the app 
• Secure website and app 
• Fraud alerts (for you and your child) 
• Purchase alerts (for you and your child) 

You should both have the ability to lock a lost or stolen debit card through the app. However, if you lock the debit card, your child shouldn’t be able to unlock it. 

Fees & Charges

Teaching your child where they can withdraw money for free is one of the financial lessons they can learn with a debit card. Fortunately, most children’s accounts have no monthly fees, no overdraft fees, and no fees for in-network ATMs. 

It’s worth mentioning that kids prepaid debit cards like Greenlight, GoHenry, and Famzoo, often charge fees for the service. For example, Greenlight, one of the more popular children’s debit cards, charges fees of up to $14.98 per month. But it also delivers a host of benefits, including 1% cash back on purchases and 5% APY on savings. 

You’ll have to decide if the added features justify the costs for your family. In most cases, a free online bank account delivers the convenience and security parents want in a child’s bank account. 

Financial Institutions’ Policies & Regulations 

When you’re choosing an account, ensure it’s available for kids in your child’s age group. For instance, Alliant Credit Union Kids Savings Account is open to kids of any age. Many accounts are only available to teens.

That said, children under the age of 18 typically can’t open a checking or savings account on their own. You can open it for them and designate the account for your child. If it’s a custodial account, ownership will transfer to the child once they reach adulthood. That age varies by state. Otherwise, you must transfer the funds to an account your child owns once they reach 18. 

Your bank may also permit you to open a joint account with your child. Be aware that your child will have full access to the money in a joint account, so choose one with features that allow you to place parental controls on the account or at least receive alerts of withdrawals, purchases, or transfers.

What to Know About Age-Appropriate Banking

As with basic life skills like cooking or changing a tire, the burden falls on parents to teach their kids about banking and personal finance since most high schools don’t offer these classes. 

But the good news is you don’t have to wait until your child reaches a specific age to teach them about money. At-home finance lessons can begin as soon as you feel your child is ready.

From birth to young adulthood, children mature at different rates. Only you can decide when your child is ready to learn specific banking tasks. Whether we’re experts in finance or child behavior, we can only provide you with suggestions.

Toddler to Preschool (Ages 2 – 5) 

As soon as your child can communicate and begins to develop a sense of self, they can start learning about money. For instance, toddlers can deposit money in a piggy bank. Preschoolers can help you wrap and count coins to deposit in a brick-and-mortar bank account. 

With children this young, it’s best to visit a neighborhood bank or credit union and open a custodial savings account. That helps the concepts of money and banking feel more real to a toddler or preschooler. 

If you still bank with a traditional bank, let your child see how you interact with tellers and learn that you can deposit and withdraw money at a bank. Banks and tellers usually don’t mind. In fact, my local bank still gives lollipops to kids. 

Middle Childhood (Ages 6 – 11)

Some banks offer special spending and savings accounts to children as young as 6 years old. That’s the earliest you probably want your child to have an account they can access with a debit card, although some parents might feel it’s still too young.

At this age, you can enlist your child’s help in choosing an online bank with high interest rates for savings. They might choose the bank with the prettiest debit card. Take the opportunity to show them how to compare features like:

• Interest rates
• Cash-back debit
• Roundup savings features
• Monthly fees
• Person-to-person payments
• Minimum balance requirements
• In-network ATMs 
• Savings subaccounts

Whether you choose an online bank or traditional bank, the account should be insured and give you parental controls over your child’s account. You should be able to limit: 

• Person-to-person payment transfers
• Purchases
• ATM withdrawals

Also consider how easy it is for you to transfer money from your account into your child’s account. I chose Chase First for my kids because I can manage their accounts in my Chase app. Transfers appear immediately, whereas transfers from other financial institutions could take three to four business days via ACH deposit. 

Preteen & Teen Years (Ages 12 – 17)

If you want to influence your child’s money personality, you should give them an opportunity to start managing their own money by the time they’re a teen. As you would with a tween, empower your teen to choose an online bank with a high-yield savings account and other features they want. 

At this age, savings subaccounts become even more important. As a parent, you may want the capability to assign chores and allow kids to receive money when they complete those chores. It’s also handy to be able to put money into certain spending categories. 

Remember, if you need to lock your child’s debit card because you don’t want them to use it, most banking apps allow that with a simple click. But double-check.

How to Open a Kids Bank Account

Depending on the type of account you’re opening, you may need your child’s full name, address, date of birth and Social Security number. 

Most banks allow you to fund your child’s account via ACH transfer from another financial institution or through a direct transfer from the same bank. Once you’ve opened the account, you may also be able to send funds via Zelle. 

For more information, see our article on how to open a bank account. It’s basically the same process for kids as adults. 

A Tale of Two Siblings With Debit Cards

Before you venture too far down the negativity rabbit hole because your kids aren’t “doing it right” according to all the parenting stuff you’ve read, I’d like to share my perspective as a parent of a teen and tween. 

My children, 2.5 years apart, were more or less raised the same when it comes to financial literacy. They both received debit cards at ages 10 and 12, with a steady allowance each month for doing a few basic household chores. 

Yet my eldest consistently spends her allowance the day after she receives it. Sometimes, she spends it on snacks at 7-11 before we even make it to the mall. (Yes, we have snacks at home!)

But my son saves most of his money for larger purchases. He often treats his friends to pizza or soft drinks, but he keeps tabs on his checking account balance and puts 25% of his allowance into his savings account each month, where it builds. 

My daughter also puts money into her savings account. But she transfers it out as soon as a vinyl record catches her eye at the mall. 

So don’t worry if your children aren’t grasping the lessons you’re teaching or you feel like you’re doing “everything right” and they aren’t catching on. Finance isn’t easy and hopefully, with the solid foundation you’re building, your kids will catch on before they have real bills to pay as adults. 

Also note that I chose to house my kids’ bank accounts at Chase because I’ve been a Chase customer for more than 20 years and it was easy and convenient to keep all our banking in one place. Better options exist for teens and tweens, including savings accounts that earn interest. 

In researching this article, I even asked my son if he would prefer to switch to a kid’s account that offers savings subaccounts and a 4.00% APY interest rate. He said he liked the convenience of using the same bank I do since it’s easy to check his balance and transfer funds. 

At age 12, he’s already learning how to weigh the benefits and drawbacks of different types of accounts. Confession: I was relieved because sometimes, parents just have to do what’s easiest for us. 

So if your child seems to be behind the curve, don’t worry. Just give them tasks they can handle and build on earlier foundations. 

Final Word

Kids can begin learning about money at the same time they learn basic concepts like colors, numbers, and reading sight words. The earlier you begin to make money a part of their life, the more likely they are to develop healthy attitudes surrounding finances. 

Money is a tool to obtain material goods we want or need. Completing work, such as chores, is one way to earn money. Money may also come as a reward for high performance, such as good grades or as part of a celebration (like a birthday). 

Developing good spending and saving habits can begin as soon as kids start to understand how money works. A spending account or joint account can help establish and reinforce good habits. If you don’t believe your child is ready for a bank account, consider a prepaid debit card for convenience.