When can you open a bank account for your child? How do you do it? More importantly, why should you do it?
We have the answers you need and some tips to get you and your child started below.
When to Open a Bank Account for Your Child
At what age can a child open a bank account? Sooner than you may think.
Children are ready to learn about money at a young age. As their parent, you know them best and can judge when is the right time to start teaching them about saving their money and using a bank.
If you’re looking for a benchmark, though, the Consumer Financial Protection Bureau (CFPB) offers this advice on when to open a bank account for your child:
“Consider opening a savings account for your child as soon as they save more in their piggy bank than you feel comfortable letting them have easy access to,” they say. “A good way to introduce your child to banks or credit unions is to explain that we use these institutions to keep our money safe and to receive interest. Even younger children will understand the safety and security part, but you might want to save a detailed explanation of compounding interest, or how our banking system works, until they’re able to get it.”
Why You Should Open a Savings Account for Your Child
You could wait until your child is in their teens to open an account. However, like learning to ride a bike, it’s easier to learn about money management from a young age rather than trying to build new habits later in life.
Here are three reasons why you should open a bank account for your kid:
- Children with bank accounts are more likely to go to college. A study found that children who have a savings account for college are three times more likely to enroll and four times more likely to graduate than students with no savings.
- Savings accounts teach children about money management. Opening an account is one of the best ways to teach your children about money. With their statements, you can show them how their interest is growing their account.
- The account keeps your child’s money safe and secure. Just like any other account, your child’s savings account will be kept safe with federal consumer protection laws and regulations. It’s also harder for them to access than a piggy bank, which is why it’s one of the best ways for kids to save money.
How Do You Open a Bank Account for a Child?
At Mercer Savings Bank, there is no age limit to open an account, so you don’t need to wait until your child is a certain age. You’re free to come in and open an account whenever you feel the time is right.
That being said, they will need someone age 18 or older on the account with them. We prefer that to be a relative such as a parent, grandparent, uncle or aunt, but that’s not a requirement.
You will need to bring your license (and theirs if they are over 15 and have one), your social security number and their social security number. If you have a piece of mail with your child’s address on it, that’s helpful. Of course, not many five-year-olds are active correspondents, so if you don’t have any, that’s fine.
Our most popular savings account type, the statement savings account, has a $50 minimum deposit. Monthly fees depend on the amount in the account. For example, there is a $2 monthly charge if the minimum falls beneath $100. (This fee will not apply to account holders under 21 years of age.)
When you’re ready to open an account Mercer Savings Bank is here to help. We’re a mutual bank, which is one of the best banks to open an account for a child because the bank is owned by account holders. If your child opens a savings account, they are considered a partial owner of Mercer Savings. Contact us or visit us to get started!