icon of two gears to show concept of expanded lessons Expanded Lesson 5 min read

Kids Checking Accounts: Things to Consider

  • Facebook
  • Twitter
  • LinkedIn
  • LinkedIn Copied link to Clipboard!

If your child is responsible enough to manage their own money, you can set up a checking account that comes with its own debit card. Here’s what you need to know about opening a bank account for your child.

kids bank accounts

Bank accounts for minors: joint versus custodial

Minors under the age of 18 usually can’t open a bank account unless they have permission from a parent or guardian because they can’t enter into a legal contract (some special circumstances may allow minors under the age of 18 to enter into a legal contract).

But you have options as a parent. You can open either a joint account or a custodial account. What’s the difference? Which one is better?

Joint bank accounts

Just as couples can open joint bank accounts, you can do the same for you and your child. Either you or your child can make deposits, withdraw money or have a debit card linked to the checking account.  You’re able to set up spending limits with this account and can deposit enough for their lunches, school fees, books and more.

Custodial bank accounts

A minor is the sole beneficiary of a custodial bank account, with you acting as the custodian and managing the account in the child’s best interests. These accounts are usually savings accounts and your child can’t access the money. When your child turns 18, they get full control of the account.

Choose a custodial account if you don’t want your child to have access to the funds. The account will be in their name, but you will be the only one who can manage it.

Using a high-yield savings account can help your money grow and earn interest. Most savings accounts limit how many times you can make withdrawals, so these are less suited for day-to-day expenses.

What to look for in a child bank account

You want to teach your child smart money management skills so that they become financially responsible adults. While you may be tempted to just open an account for your child wherever you have an account already, it might pay to shop around. There are certain features that may be more relevant in a kid’s bank account that aren’t as important in a normal account.

Monthly fees

If you’re going to set up your joint account with your child as a way for them to be responsible for some of their own expenses, you shouldn’t have to worry about them overdrawing their account. Some financial institutions may have fees for purchases, ATM usage and other transactions. Pay attention to minimum balance fees and other spending requirements or find an account without them.

If you think your child will need to use the ATM, make sure your financial institution has multiple ATMs available or find one that doesn’t charge any fees. Find an Ent Location today.

Parental controls

Some financial institutions allow you set up transaction limits on a joint account for your child. They will send you text alerts or emails when your child accesses the account or when they withdraw over a certain amount. Others offer free budgeting tools that your child can use to manage their finances.

When you look around for a bank account for your child, consider how responsible they are and how much control you’ll need or want over their money.

Other features

Some checking and savings accounts have an annual percentage yield (APY) and earn interest. This not only helps them earn a bit of extra money but can also serve as an opportunity to teach them about the value of compound interest and how it can help grow your money.

Choosing a local financial institution

Smaller, local financial institutions, such as a credit union, are great for building a personal relationship with your child. The representatives might be able to share knowledge or give advice, and it’s always nice to see a friendly face. Many banks and credit unions have a wealth of online educational tools, so if you can, encourage your child to use them.

Teaching your child about money

Building good spending habits as a kid can contribute to a financially stable life in the future. Children will learn things like overdrawing their account can result in fees, so they’ll want to avoid that. They can also learn bounced checks are a bad thing, although most kids in high school use a debit card rather than write checks. Furthermore, they’ll get comfortable with the idea of managing an account to help them build more independence.

What about prepaid cards?

That’s an option. When you shop around for a prepaid card, take note of the fees attached. Some prepaid cards charge as much as $10 a month. The good thing is that you won’t have to worry about overdrafts, although some do charge fees to decline a purchase.

Next steps

At Ent, we offer free student checking accounts for people ages 15 to 26. These accounts are specifically designed for students ages 15 to 26 enrolled in high school or post-secondary education, such as college, technical school and vocational school. This may be a better option than enrolling your child in a kid’s checking account. You’ll earn dividends on your account balance, get a free VISA debit card and you’ll have access to our mobile app and online banking. Always keep in mind, however, that some accounts charge a fee with each purchase or ATM withdrawal.

Consider the benefits of signing up for a youth savings account or certificate of deposit (CD) as well. The balance will accrue interest every month to help you and your child save up for big purchases.

Remember that there are no age limits for opening a checking account as long as the cosigner is at least 18 years of age.

All of our Service Center locations are staffed by friendly people who are there to help you and your child manage your finances.

Related Resources

View All