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Do I have to be an account holder at a bank to open an account for my child?

February 22, 2012: 5:05 AM ET

In the interest of teaching my young daughter the value of saving money, I recently attempted to open a savings account for her at a local bank. Much to my surprise, the teller informed me that the bank would not open an account for her unless I was an account holder as well. Is this a legitimate prerogative of the bank? — Name withheld

While some banks will welcome a minor as a customer, most will require the parent be included on the account. You can continue to shop around if you wish, but most banks are going to mandate that a parent be involved. One reason is that since a bank account involves a formal contract, a minor's involvement in that contract is simply not valid. And since many younger people have little or no experience in financial manners, many banks simply prefer that mom or dad be associated with the account in case a problem crops up.

Still, it's a great idea to start teaching your daughter how to handle money responsibly. And as Mike McGervey, president of McGervey Wealth Management in North Canton, Ohio points out, many banks have several ways in which an account for a child may be established. Some have special children's accounts that are "kid friendly" with no fees, no minimums and which even pay reasonable interest. The child can set up such an account with an adult and will have full access to his or her account information online, although transferring money or check writing requires a little help from the adult (electronic transfers require an adult PIN number; checks also require an adult signature.) At 18, most children's accounts will automatically convert to an adult account.

-- Jeff Wuorio

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