Do I Have to Be 18 to Open a Bank Account?

Opening a bank account often raises questions about age eligibility. While most banks require individuals to be 18, various options allow younger individuals to access banking services. Understanding these options helps families make informed financial decisions.

Understanding Age Requirements for Bank Accounts

Most financial institutions require an individual to be at least 18 years old to open a bank account independently. This age requirement stems from the legal principle of “contractual capacity.” Minors, defined as individuals under 18, lack the legal capacity to enter into binding contracts. A banking relationship involves a contractual agreement, and if a minor were to enter such an agreement, they could legally void the contract, which presents a significant risk for financial institutions.

This legal limitation means a minor cannot independently open a checking or savings account. The requirement for an adult to be involved is standard industry practice based on these legal principles, ensuring financial agreements are legally sound and enforceable.

Establishing a Bank Account as an Adult

For individuals 18 or older, establishing a bank account is a straightforward process. Banks require specific documentation to verify identity and residency. This includes a valid government-issued photo identification, such as a driver’s license, state ID card, or passport.

Applicants need to provide their Social Security Number (SSN) or Individual Tax Identification Number (ITIN). Proof of address, such as a recent utility bill, bank statement, or rental agreement, is also commonly requested. Adults have the flexibility to choose from various account types, including checking accounts for daily transactions and savings accounts for accumulating funds, without needing a co-signer.

Opening Accounts for Minors

While minors cannot open accounts independently, several options allow them to engage with banking services with adult involvement. These accounts help young individuals learn financial literacy and manage money under supervision. The two primary types are joint accounts and custodial accounts.

Joint Accounts

A joint account allows a minor to be added as a co-owner with an adult, typically a parent or legal guardian. Both share access, enabling deposits and withdrawals. The adult retains legal control and liability, supervising the minor’s financial activities. This setup is useful for teaching financial literacy or managing earned income.

When a minor with a joint account reaches 18, the account generally remains joint, and the adult co-owner retains full access. It is advisable for the new adult to open a separate individual account and transfer funds, as the original adult can still access all shared funds. To set up a joint account, banks require the minor’s Social Security Number and the adult’s government-issued ID and SSN.

Custodial Accounts (UTMA/UGMA)

Custodial accounts, established under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA), allow funds to be held for a minor’s benefit. An adult custodian manages these accounts for the minor, who is the legal owner of the assets. Funds are an irrevocable gift, and the custodian must manage them prudently and in the minor’s best interest.

UGMA accounts are limited to financial assets like cash, stocks, and mutual funds. UTMA accounts offer broader flexibility, allowing for a wider range of assets, including real estate and intellectual property, in addition to financial instruments. The minor gains full control of the assets upon reaching the age of majority, which is 18 or 21, though some states allow deferral until age 25. To open a custodial account, the minor’s Social Security Number and the custodian’s identification are required.