How To Open a Bank Account for a Minor

Financial Education has never been as special a subject as it is today. For example, parents increasingly want to know how to open a checking account for a minor.

Furthermore, with the encouragement for minors to start thinking about the future, many parents and guardians end up having doubts.

If you have questions about opening an account for your child, what these types of accounts are, benefits and cons and much more, read this article and find out!

What to consider before opening a minor account

Before opening a bank account for minors, take into account some factors such as:

• Age requirements: Check which age groups are allowed on current accounts. This is because age rules change depending on the financial and banking institution. For example, some banks accept the inclusion of children of any age, while other banks only accept those aged 14 or 16.
• Automatic change of account type: Some banking institutions change the type of account when the young person reaches the age of majority. Therefore, fees tend to be more expensive. Analyze if this is what you want.
• Financial Education Resources: Many current accounts aimed at minors currently provide financial education resources and this is very useful for your child’s development. So, if possible, prefer this type of account.
• Monthly fee: Always check the monthly fee for your current account. Unlike savings accounts, checking accounts have monthly fees.
• Card: Check if the current account for your child offers debit and/or credit cards so that you can decide on the account that best suits what you want to offer your child, right?

Additionally, before requesting an account for a minor, consider whether:

• The young person or child is mature enough to handle a current account, even if an adult supervises it.
• The child or young person wants a current account, as imposed things are not good for education.

What is needed to open a bank account for children under 18?

Rules may vary by country, state, and even financial institution.

But, in general, to open bank accounts for minors, you must present documents from the adult legally responsible for the minor and the minor.

The documents are the usual: identity document for both, proof of residence, proof of income of the responsible adult.

In addition, a document proving that the adult is the legal guardian of the minor may also be required.

→ SEE ALSO: Dealing with a Cloned Card: Steps to Protect Your Finances

Types of bank accounts for minors

The financial market already offers some types of accounts for minors.

Below, you can see some examples of these account types and choose the best option for your child.

1. Joint Accounts

If the goal is for children or teenagers to use the account, such as for deposits, withdrawals and debit card purchases, a joint account may be a good choice.

Bank accounts often marketed as “kids bank accounts” are often joint accounts, although they have different names.

For example, Capital One’s “Teen Money Checking Account” is a general checking account for all children ages 8 and older.

One, for example, is a joint checking account available to all children aged 8 and over.

2. Custody Accounts

Custodial account is an account opened and managed by an adult for a child, allowing the adult to save and invest on the child’s behalf.

Unlike joint accounts that allow children to use and withdraw funds, adults are the only ones with the authority to manage the savings account.

However, this money belongs to the child.

3. Education account

In addition to basic banking services, there are also several accounts for educational expenses.

These accounts may have tax benefits, so they can ease the burden of paying for school.

If your objective is to provide credit resources to minors, a tip is to opt for current accounts that issue prepaid credit cards.

The prepaid card is interesting and safe, as it avoids debt.

It is only possible to make purchases and payments with the credit function if there is sufficient balance on the card.

Pros of opening a checking account for a minor

A kids’ bank account is designed to help them grow their savings and learn healthy financial habits.

It works similarly to an adult’s bank account, but a parent or guardian must be listed as a co-owner of the account, giving you more control and oversight over your children’s spending and saving habits.

Furthermore, when it comes to your children’s future, the sooner you start planning, the better.

Accounts for those who have not yet turned 18 are a way for children or adolescents to enjoy benefits such as autonomy, responsibility, freedom and also learn to have financial control, managing expenses and carrying out transactions.

The main advantages and benefits of opening an account for a minor are:

• Take advantage of solutions that also contribute to strengthening the region.
• Participate in the division of results among associates.
• Use a debit card to make purchases in Brazil or abroad.
• Being able to use the virtual card for online purchases.
• Access investments from our institution.

Cons of opening a checking account for a minor

Like everything in life, opening a checking account for a minor can have some drawbacks. In this case, the adult must pay attention.

The main disadvantage is that an adult will always need to accompany and support the minor when using the account.

In this sense, the minor may feel very “controlled”. But this problem can be easily resolved with good communication.

Finally, dealing with money is part of our lives and should be present in our children’s education from childhood.

So, how about taking advantage and opening a current account for a minor, for your child?

Also, addressing the topic on a daily basis can make your child more knowledgeable about money, spending, saving and, as a result, learn to be financially responsible.

And this issue goes far beyond just giving an allowance. Initiating children in a simple way, making it something common, according to each one’s level of understanding, can help them grow up responsible and be able to take care of their financial life with security and commitment.

→ SEE ALSO: 5 Definitive Tips for Dealing with and Getting Out of Debt