It’s not uncommon for young people to have their first interaction with money in the form of a current account and prepaid card, rather than pocket money given by their parents. That’s why major banks are providing teen bank accounts that can easily be opened online.
Whether you’re a parent trying to find an account for a child under 18, or a teenager wanting to open an account to start managing money, we’ve put together all the information you should need in this handy guide.
What is a teen bank account?
- A bank account for those aged 13-18
- Secure account to deposit money
- Debit card or cash card to make purchases and withdraw cash
- Earn interest on balance every month
- Restrictions to make sure account owner can’t incur debt
In the same way a bad credit bank account is restricted to ensure the owner can’t incur debt, a teen bank account performs the same function; allowing a teenager to manage their money in a secure place without having to pay additional fees and charges in the process.
Bank accounts that are made for teenagers usually come with a lot more restrictions than a standard current account and less opportunity for incurring debt. That means no overdraft, no direct debits and a cap on how much can be withdrawn every day.
Despite the restrictions, it’s a good way for teenagers to start getting used to managing money on their own and becoming more comfortable with spending.
Can I open a bank account if I’m under 18?
The answer is yes, you can! However, whilst you won’t have access to the complete range of standard current accounts, you will still be able to apply for specialist teen bank accounts, as mentioned above, which are for those aged between 13-18.
The only time you can’t apply for a bank account is if you’re under the age of 13. On this occasion a parent will usually have to apply for the account on your behalf and manage it for you. You will get the opportunity to convert the account to a teen bank account once you turn 13.
The benefits of an under 18 bank account
- You can manage your own money in a secure place
- Use a debit card to make payments
- Withdraw cash from an ATM
- Start to earn interest on your balance
- Restricted to ensure you can’t incur debt
A teen bank account is a great way to start managing your own money and getting used to monitoring your balance so you don’t overspend. It’s also much safer than carrying cash around with most banks giving you the ability to freeze or lock the card if it is lost or stolen.
Alongside not being able to get an overdraft, you will usually simply be declined if you try to spend more than you have in the account, without incurring any fees or penalties for doing so. This ensures you don’t have debt to pay off at a later date.
You can also withdraw cash but there is usually a limit on how much you can take out per day, meaning there is less opportunity to overspend in this way too.
Limitations of an under 18 bank account
- Unable to set up direct debits or standing orders
- No access to additional features such as an overdraft
- Limit to how much cash can be withdrawn per day
Even though teen bank accounts have lots of benefits there are a few limitations, but usually for a good reason.
Limitations such as no access to an overdraft and limited access to cash per day actually stops the account owner overspending or getting into debt, which is beneficial for those with limited experience of managing money.
Not being able to setup direct debits or standing orders mean that money can’t be removed from the account unless the owner is spending it. This can be inconvenient but is for a good reason, as the account should really just be used for spending money rather than entering into any finance agreements.
Start your search for a teen bank account
If you would like to search for a teen bank account for yourself or on behalf of someone else, start your search by navigating to the under 18 accounts table using the link below.