Yes, a minor can have a bank account, but almost every U.S. bank requires a parent or legal guardian to be on the account as a co-owner or custodian until the child turns 18. Federal banking rules do not bar a minor from being an account holder; state contract law and individual bank policies are what make an adult’s involvement a practical requirement.
Why an Adult Has to Be on the Account
A bank account is a contract, and under a longstanding legal principle called the infancy doctrine, people under 18 generally lack the legal capacity to be bound by one. A minor can walk away from the agreement, making the contract voidable at the minor’s option, while the bank cannot. In practice, that means a minor could disavow responsibility for overdraft charges, fees, or a negative balance and leave the bank with no legal remedy.
Banks manage that risk by requiring an adult to join the account. The adult takes on full legal responsibility for the account’s activity, including any debts it generates. Federal rules point the same direction: under the Customer Identification Program regulations, when a parent opens an account on behalf of a minor, the parent, not the child, is treated as the bank’s “customer” for identity verification.1FinCEN. FAQs: Final CIP Rule
Some banks market dedicated teen checking or savings products for ages 13 to 17, but those still require a parent or guardian on the account. The age of majority is 18 in most states, and few banks will allow a fully independent account before that birthday.
Joint Account or Custodial Account
Banks offer two main structures for a minor’s account. The choice depends on how much day-to-day access the child needs and what the money is for.
Joint Accounts
A joint account lists both the adult and the minor as co-owners. Both can deposit and withdraw, and either can use a linked debit card. The FDIC treats both co-owners as having equal rights to the entire balance, so neither needs the other’s permission to access funds.2Federal Deposit Insurance Corporation. Joint Accounts This structure works well for a teen’s part-time earnings, everyday spending, and learning basic money management.
The tradeoff is creditor exposure. Because the adult is a legal co-owner, the funds can be reached by the adult’s creditors. In many states, a creditor holding a judgment against one co-owner can garnish the entire joint account, even money the minor deposited, unless the non-debtor can prove which funds are theirs. The rule runs both ways: if the minor incurs a debt and a creditor obtains a judgment, the adult’s contributions could be at risk. Challenging a garnishment is possible but requires prompt legal action.
Custodial Accounts (UGMA and UTMA)
Custodial accounts are set up under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA), both adopted in some form by every state. The adult serves as a custodian who manages the assets solely for the minor’s benefit. The money belongs to the child from the moment it is deposited; it is treated as an irrevocable gift and cannot be taken back by the donor.
Because the minor legally owns the assets, the custodian has a fiduciary duty to use the funds only in ways that benefit the child. The minor does not have direct access. The custodian controls spending and withdrawals until the child reaches the state’s termination age, typically 18 for UGMA accounts and 21 for UTMA accounts, though some states allow extensions up to age 25 if specified when the account is created. At the termination age, the custodian must hand over full control.
FDIC insurance treats a custodial account as the minor’s own deposit, insured up to $250,000, separate from any accounts the custodian holds in their own name at the same bank.3Federal Deposit Insurance Corporation. Single Accounts And because the minor owns the funds, they are generally not reachable by the custodian’s personal creditors.
What You Need to Open the Account
Federal law requires banks to collect four pieces of identifying information from every account holder: name, physical address, date of birth, and a taxpayer identification number, typically a Social Security number.4eCFR. 31 CFR 1020.220 – Customer Identification Program Requirements for Banks The adult usually needs to present an unexpired government-issued photo ID such as a driver’s license or passport.
For the minor, the rules are more flexible. Banks use risk-based verification procedures, so acceptable documents vary. A birth certificate, school ID, Social Security card, or passport may work depending on the institution.1FinCEN. FAQs: Final CIP Rule Call the bank in advance to confirm what they accept, and bring extra documentation to avoid a wasted trip.
Most banks require a small opening deposit, commonly between $25 and $100. You can usually apply online or in person. If you are opening a custodial account, the application will ask you to designate the custodian and the minor beneficiary; make sure those roles are entered correctly so the account is coded properly for legal protections, FDIC insurance, and tax reporting.
Many teen and student checking accounts have no monthly maintenance fee while the minor is under 18 or enrolled in school. If the account does carry a fee, it is often waived when the account meets conditions such as a minimum balance or regular deposits. Fee waivers tied to student status may expire in the account holder’s mid-twenties or when they can no longer provide proof of enrollment.
Overdraft Rules and Spending Limits
Banks typically set lower daily ATM withdrawal caps and point-of-sale limits on accounts held by minors. The adult co-owner can usually adjust these limits through the bank’s online portal or by calling customer service, up to the bank’s maximum thresholds.
Overdraft protection is governed directly by federal law. Under Regulation E, a bank cannot charge a fee for covering an ATM or one-time debit card transaction that exceeds the balance unless the account holder has specifically opted in to that service.5Consumer Financial Protection Bureau. 12 CFR 1005.17 – Requirements for Overdraft Services On a joint account, any co-owner’s opt-in counts as consent for the entire account, and any co-owner’s revocation withdraws that consent. If you want to prevent overdraft charges on a teen’s debit card, make sure no one on the account has opted in, or ask the bank to decline transactions that would overdraw the balance.
Taxes on Interest a Minor Earns
Interest earned in a minor’s bank account is taxable income and is generally reported under the child’s Social Security number. The bank will issue a Form 1099-INT to the child if the account earns more than $10 in interest during the year.
For 2026, the IRS applies “kiddie tax” thresholds to a child’s unearned income, which includes interest and dividends:6IRS. Revenue Procedure 2025-32
- The first $1,350 is tax-free, covered by the child’s standard deduction.
- The next $1,350 is taxed at the child’s own rate.
- Anything above $2,700 is taxed at the parent’s rate, which is usually higher.7IRS. Topic No. 553 – Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax)
Most minors with a simple savings account earn far less than $1,350 in interest and owe nothing. A custodial account with a large balance or investments producing significant dividends is where the kiddie tax typically kicks in. Parents may elect to include a child’s unearned income on their own return using IRS Form 8814 if the child’s total gross income is between $1,350 and $13,500 and consists only of interest and dividends.7IRS. Topic No. 553 – Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax)
How a Custodial Account Affects Financial Aid
If your child plans to apply for federal financial aid, the account type matters. Because custodial account assets legally belong to the minor, they are reported as the student’s assets on the FAFSA. Student-owned assets reduce financial aid eligibility at a rate of 20 percent of net value, so every $10,000 in a custodial account can cut a financial aid package by roughly $2,000. Parent-owned assets are assessed at a much lower rate that maxes out at 5.64 percent. A joint account where the parent is a co-owner may receive more favorable FAFSA treatment than a custodial account holding the same balance.
Some families intentionally use joint accounts for college savings for this reason, despite the creditor-exposure tradeoff. If college aid is a priority, weigh the FAFSA impact before choosing an account structure.
What Happens When the Minor Turns 18
Turning 18 does not automatically convert a minor’s account into an independent adult account. What happens next depends on the account type.
Joint Accounts
A joint account stays a joint account after the minor turns 18. The adult co-owner remains on the account unless someone takes action to change it. To remove the parent and convert the account to an individual account, both parties typically need to visit a branch with valid government-issued ID. Some banks will close the joint account entirely and open a new one in the young adult’s name. Contact the bank around the minor’s 18th birthday to learn the specific process and whether the account will be converted to a standard checking product with different fees or features.
Custodial Accounts
Custodial accounts have a legally mandated termination date. UGMA accounts terminate at 18 in roughly half of states and 21 in most of the rest. UTMA accounts typically terminate at 21, though several states allow the donor to specify a later age, up to 25 in some cases. Once the minor reaches the termination age set by state law, the custodian must transfer full control of the assets, and the young adult becomes the sole owner with unrestricted access. The termination age is set by the state where the account was established, not by bank policy, so check your state’s version of the UGMA or UTMA if you are unsure which age applies.