Opening a bank account for your kids and becoming a joint account holder is a great way to:
- Reinforce basic banking concepts that we take for granted, such as adding and withdrawing funds
- Teach basic budgeting skills and demonstrate the importance of spending less than you earn, a cornerstone of financial responsibility
- Demonstrate the importance of saving, even if it’s just a few dollars per month, to the young child in your life
- Get a head-start on long-term savings goals, such as higher education supplies and tuition
- Communicate the value of having long-term financial goals in general
Here’s a closer look at the differences between the two major types of kid-friendly bank accounts, plus a roundup of the best checking, savings, and prepaid accounts for kids under age 18.
The Best Kids Checking Account
Set on a true checking account for your kid? Copper is the best option on the market right now because it has virtually no fees, robust education features, and beyond-banking capabilities including guided investing.
See our list of the best checking accounts for kids under 18 for more ideas.
Most of the accounts on that list are free or low-cost and have low minimum balance requirements. Some have decent interest rates as well. But be sure to carefully review all account disclosures before applying.
Unless otherwise noted, those kid-friendly bank accounts are all structured as joint ownership accounts, not custodial, and are FDIC-insured.
The Best Kids Savings Account
Want to give your kid a head start on building wealth? Consider a kid-friendly joint savings account.
Our top pick in this category is the Alliant Credit Union Kids Savings Account thanks to its high yield and availability for kids under 13. Talk about a head start!
For more ideas, check out our list of the best savings accounts for kids.
As true savings accounts, all are subject to a withdrawal limit of no more than six per statement cycle under U.S. law. But it’s less common these days for banks and credit unions to charge excess withdrawal penalties, so this rule has fewer teeth than in the past.
Unless otherwise noted, all the accounts on our best kid-friendly savings account list are joint accounts rather than custodial. Legally, the account’s minor owner can deposit, withdraw, and move funds before their 18th birthday.
The Best Kids Debit Card
If you’d prefer not to open a joint or custodial account for your minor child, consider a prepaid debit card instead.
Many parents use Visa-, American Express-, or Mastercard-branded prepaid debit cards for teens as replacements for cash allowances or bank accounts. They feel like they’re easier to manage and control, and they don’t require a traditional banking relationship.
Our top pick in this category is Greenlight, a kid-friendly debit card and money management app that makes it super easy for parents to keep tabs on youngsters’ allowance funds and walk around money while incentivizing them to make smarter financial decisions.
For more ideas, check out our list of the best debit cards for kids.
Kids Bank Accounts FAQs
If you still have questions about how kid-friendly bank accounts work, we have (some) answers here.
Can Kids Have Their Own Bank Accounts?
Technically, no. With the exception of legal emancipation, U.S. law prohibits children under age 18 from having sole ownership of deposit accounts, such as checking and savings accounts.
However, most U.S. banks and credit unions allow children to hold deposit accounts together with a parent.
True minor-friendly bank accounts come in two forms with very different characteristics and permissions: joint accounts and custodial accounts.
Can Kids Have Their Own Debit Cards?
Yes. Parents often set their kids up with reloadable prepaid debit cards before opening their first bank account.
With strict parental controls and all-ages availability (versus 13 and up for many kids checking accounts), a debit card is a good first step for parents unsure about opening a kids’ bank account right away.
What’s a Joint Bank Account for Kids?
If you’re married or in a committed relationship, you may hold one or more joint financial accounts with your spouse or partner. The same idea applies to accounts held jointly with minor children; both you and your child can make deposits and withdraw funds as you see fit.
Parents can exercise considerable control over accounts held jointly with children. When your kid is too young to work legally, you’re likely to be the sole or principal source of their funds. If you want to set a strict weekly or monthly spending limit for them, simply fund the account at the desired level and frequency.
Generally, joint deposit accounts are ideal for day-to-day expenses and short- to medium-term savings. Most checking accounts place few restrictions, if any, on deposit and withdrawal amounts and frequencies. By law, savings accounts limit withdrawals to six per statement cycle, with excess withdrawals subject to penalty fees.
Should You Open a Savings Account for Your Kid?
Yes, but start with a checking account or debit card first to avoid the monthly transaction limits.
Once your child can resist the temptation to raid it for short-term needs, open a high-yield savings account for long-term savings goals, such as college tuition, your kid’s first car, or a security deposit on their first apartment.
What’s a Custodial Bank Account for Kids?
Under the Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA), parents or legal guardians may establish custodial accounts for the benefit of minor children without involving a trust fund or trustee. UGMA and UTMA permit a wide range of assets, but most banks limit custodial deposit accounts to cash only.
The minor holder of a custodial account is its owner and primary beneficiary. However, until the minor reaches the legal age of majority, the account’s custodian acts as its steward. A parent or legal guardian may serve as the custodian or designate an outsider — typically a financial institution or third-party financial advisor — to fill this role.
In either case, the custodian is a fiduciary, which means they may make disbursements from the account to cover qualifying, reasonable expenses but must manage the account in the minor’s best interests. Full control of the account and its contents must pass to the minor when they reach the age of majority.
Is a Custodial Bank Account a Good Idea for Your Kid?
Maybe — it depends what you plan to use it for.
Because a minor custodial account beneficiary can’t access their account’s funds without the custodian, custodial accounts are not appropriate for day-to-day use or short- or medium-term savings. They are suitable for long-term savings goals, such as higher education. Treat them like savings accounts, even if they’re not technically set up as such.
Where you bank is your choice and yours alone. Most banks and credit unions, from big institutions like Bank of America to smaller outfits like Alliant Credit Union, allow parents to open joint or custodial accounts for their minor children.
If you have a longstanding relationship with a local bank or credit union, you may want to look into whether they offer kid-friendly accounts.
Before you make a final decision and take steps to become a joint account holder, check out our compilation of the top bank account promotions. If you don’t have an existing banking relationship with one of the best banks for kids, you might as well seek out the highest bidder.