Young people deserve control over their own money, bank accounts, and credit. Teenagers should be able to manage the money they earn and make financial decisions on their own. However, banks, credit card companies, and some state laws place strict rules that make it almost impossible for minors to open independent accounts, access their own earnings, or build credit. Oftentimes, parents are required to take full control over teen accounts, even when the money was earned completely by the teenager themself.
These limits can slow the development of independence, responsibility, and confidence related to financial concerns. Along with this, discriminatory financial policies can harm youth by opening them up to financial exploitation and theft from their parents—which minors have no legal way to recover from. It is important for young people to understand how financial systems work so they can make responsible decisions and protect their own money. NYRA advocates against discriminatory bank policies and laws that restrict minors from having complete control over their own money.
Table of Contents
- State Laws Restricting Youth Financial Autonomy
- Discriminatory Bank Policies Against Minors
- Teen Accounts Offered by Banks
- Age Restrictions on Credit Cards
- Benefits of Financial Independence for Young People
- The Dangers of Parent Managed, “Teen” Bank Accounts
- How Financial Discrimination Against Youth Leads to Parental Financial Exploitation
- Possible Solutions to Improve Youth Financial Freedom
- Conclusion
The National Youth Rights Association
If you’re interested in Youth Rights, consider volunteering with us. We are always looking for new members and would love to have you on board. If you have a personal story to share, about how financial discrimination has negatively impacted your life, or about a general youth rights violation, consider sending us an email at nyra@youthrights.org. We’d love to help get your story out to the world.
State Laws Restricting Youth Financial Autonomy
Some states across the United States have placed laws related to youth financial access that affect minors’ ability to use bank accounts and financial services on their own. In most states, minors are not legally allowed to sign contracts without the permission of a parent or guardian. Additionally, some states require parents to completely control the way their child accesses or manages their own money if they are under 18 years of age.
Below are states that currently have laws that restrict minors’ access to independent bank accounts or financial services:
Texas: Placed laws that allow parents to deny their children from opening a savings or checking account if they are under 18 years of age under the Texas Finance Code § 34.305.
Oklahoma: Under the Oklahoma Statutes Title 6 § 903.1 law, parents or guardians have the ability to control if their children are able to open and manage bank accounts.
West Virginia: Allows parents to block payments made by minors through banks under West Virginia Code § 31A-4-33.
Florida: Requires parental permission for minors to open non-custodial checking or savings accounts under Florida Statutes § 665.77 – Deposits by Minors.
Washington D.C.: Requires parental permission for minors to access certain financial accounts under D.C. Code § 21-319 (Uniform Transfer to Minors Act).
Missouri: Minors must be at least 16 years of age and meet specific requirements in order to open an account without parental permission. This includes being legally independent, homeless, or a victim of domestic violence (Missouri Revised Statutes § 431.056).
Read more about Statutory Requirements for Opening Bank Accounts for Minors
Discriminatory Bank Policies Against Minors
Today, a majority of the largest banks in the United States have already placed strict age requirements and rules requiring parental involvement in regards to financial accounts. This includes:
Capital One: Requires individuals to be at least 18 years of age in order to open an independent account. However, minors have the opportunity to open a joint account with a parent or guardian, or open an account under their “MONEY Teen Checking” service. These accounts allow parents to monitor balances, deposits, and spending in real time.
Chase Bank: Offers a high school checking account for minors, but requires a parent or guardian to be a co-signer. Through this, the parent has access to monitor transactions and control the account completely. Independent accounts for minors are not clearly offered, meaning most individuals under 18 years of age are required to have parental involvement.
Wells Fargo: Requires individuals under 17 years of age to have an adult co-signer for checking and savings accounts. The adult has complete access to the account, including the ability to withdraw funds and monitor all activity.
PNC Bank: Requires parental consent and joint ownership for all minor accounts. Parents are given full control over the account.
U.S. Bank: Requires parental consent and joint ownership for all minor accounts. Additionally, parents have the ability to view all account activity and manage how funds are used.
TD Bank: Requires minors to have a parent or guardian linked to their account. The adult has complete access and control over account activity.
M&T Bank: Requires minors to have a parent or guardian to be a co-owner on their accounts. This gives the adult full access to monitor and control the account.
Regions Bank: Requires parental consent and joint ownership for all minor accounts. Additionally, parents have the ability to view all account activity and manage how funds are used.
These restrictions are often put in place to protect youth from possible financial risk. However, this can instead limit a young individual’s ability to manage their own money independently. Due to parents having complete access over these accounts, minors may not be able to keep control of money they earn on their own.
Teen Accounts Offered by Banks
Many banks use “teen accounts” as a way to add safety features without completely blocking minors from accessing banking services. These accounts are placed automatically for individuals under 18 years of age. These accounts come with stronger restrictions on spending, account access, and oftentimes require parental controls.
Banks such as Capital One, Chase, and Wells Fargo heavily encourage the use of teen accounts, which place strong restrictions on the bank accounts that minors are allowed to have. These accounts oftentimes give complete access control to parents, which can become a major issue for teenagers who make their own money.
Many banks use default teen account systems. This means that when a minor tries to open an account on their own, they are automatically placed in a restricted account with parental monitoring. This system makes it difficult for minors to gain full control over their own money. Not only does this delay financial independence, but it also blocks youth from having full control over their money.
Age Restrictions on Credit Cards
A majority of credit card companies in the United States require individuals to be at least 18 years of age in order to apply for a card independently. Minors under 18 years are often faced with limitations, including requirements of parental involvement.
Some banks allow teenagers to be authorized users under a parent’s credit card; however, the adult is still left with complete control. Other banks offer teens credit cards with parental co-signers, which gives the parent the ability to view all account activity and manage how things are used. While these restrictions are placed to prevent youth from overspending, this can also delay their understanding of how to manage credit responsibility. This increases the chances of them making poor financial mistakes throughout adulthood due to being unprepared.
Benefits of Financial Independence for Young People
Understanding the importance of financial independence at a young age helps to ensure common financial risks do not occur throughout adulthood. Having control over their own money allows teens to make decisions and develop skills that should be learned earlier on in life than it often is for many adults. Financial independence helps enhance skills in responsibility, money management, and self-discipline.
A study by Brigham Young University summarized in their news release that children who are given opportunities to manage money when they’re young are more likely to be financially responsible as they enter adulthood. The article states: “Children… who are allowed to make some choices about their money are much more likely to be able to manage a bank account, budget, and know how to handle spending as they grow up.”
Another recent study in the journal Young Adults Constructing Financial Agency (Sept 2024) examined how young adults develop financial agency: having early exposure to financial decisions and autonomy supports building “agency”, their capacity to manage money, budget, and invest successfully later in life.
According to the National Library of Medicine, young people who have opportunities to manage money and make financial decisions are more likely to save, budget, and avoid risky financial behaviors later in life. Additionally, it has been found that youth who received financial education in adolescence had up to 30% higher personal savings rates compared to those who did not. They were also less likely to take on high-cost debt in their early 20s.
Research found by the United Way NCA shows that teenagers who tracked their spending while in high school continued their same habits throughout adulthood. These skills lead to more financial stability helping to reduce problems that may take place in the future.
This shows that giving teens control over their money helps them develop essential life skills. It is especially important for those who may not receive guidance at home. Financial independence helps young people prepare for adult responsibilities, build confidence, and avoid common financial issues in the future.
The Dangers of Parent Managed, “Teen” Bank Accounts
Even though parents have this responsibility to prepare their child for financial aspects of the world, there are often instances where parents do not respect the financial independence of their children. Because parents do not always have their child’s best interest at heart, there are major risks in requiring teen bank accounts to be managed by a parent. Giving parents complete and unfiltered access to their teenager’s money allows the parents to remove any amount of earned or saved income from the teen accounts, whenever they want, without any restrictions.
This empowers parents to hold their child’s money over their head, using their financial control to punish the child in the event of a household dispute. Imagine a teenager finally is able to acquire a job, trying to build up responsibility, and put their life on the right track. They put in long hours after school, making sure they show up to their job on time and get all of their tasks done. They did this so they can earn money as a reward for their labor, so they can have a sense of financial freedom. But then, their parent doesn’t like their behavior, and decides to remove all of that earned income as a punishment. Imagine hours of work accumulating to nothing, just because a parent has the ability to hold their kids’ earned income over their heads.
Furthermore, parents using earned income as punishment is far from the only risk of parents’ managing a teen’s bank accounts. Sometimes, parents will just decide to rob their children for their own selfish desires. Parents could hypothetically rob their children, using the “teen account” and spend the money on any personal desire. In an ideal world, this would never happen, but unfortunately, there are many oppressive parents who do not have their child’s best interests at heart, and will instead use their child’s money for their own selfish benefit.
Imagine a drug addict or alcoholic parent who will do anything to get their next fix of their poisonous substances. They already spent all of their disposable income on their vices, but they still crave more. They check on their teenager’s bank account, seeing all the money saved up from working, and see it as a free piggy bank, that they can empty as they please. Suddenly, all of a teenager’s hard work is gone in a heartbeat, because their addict parent had the ability to rob their child.
The following story details a first-hand instance of a young person whose mother removed all of her income from months of working, using a “teen account”, and spent all the money on personal vices such as drugs and alcohol.
Read more about How Banks Discriminate against Youth – The Dangers of Parent Managed, “Teen” Bank Accounts for more personal stories and information on the dangers of financial discrimination against youth.
How Financial Discrimination Against Youth Leads to Parental Financial Exploitation
Discriminatory financial policies by banks opens up youth to financial exploitation by their parents. This is especially an issue when it comes to child actors, models or social media influencers. There have been many instances where a child actor or star is the one making the money, but their parent controls it, and then uses it for their personal gain, or outright prevents the child from having any access to it. Then, the child has to continue working, while receiving none of the rewards of their own labor—basically being forced to fund their oppressive parent’s lifestyle. If banks allowed minors to open independent checking accounts, where they had complete and total access to their own money, then the parents would be unable to exploit them in this way. However, since youth do not have any financial freedom and independence, the corrupt system gives parents too much power over income earned by their children.
Now, while certain states have protections against parental financial exploitation, these protections usually involve the child’s earnings being set aside for them in a trust account which they do not have access to until they are an adult. A better solution to this would simply be improving youth financial autonomy, by allowing minors to open bank accounts independently of their parents, and enter into business contracts themselves.
Possible Solutions to Improve Youth Financial Freedom
Stronger State Protections for Youth Financial Freedom: States should pass laws that protect minors’ rights to access and manage their own money. These laws could prevent unnecessary parental controls while still keeping youth safe from serious financial risks. These laws should make it so that banks are not allowed to deny services to any individual solely based on age. This would make it so young people wouldn’t be completely barred from opening independent bank accounts, and their access to credit cards would depend on their individual situation, rather than just their age.
Financial Education: One of the main reasons why these discriminatory financial policies exist, is because society doesn’t trust young people to handle their own finances. In order to fix this, we should prioritize education, rather than control. All schools should offer a course or program for teens that teach them how to budget, save, and make responsible financial decisions from a young age. Some states across the United States have already begun placing available personal finance courses for high school students.
Stronger Criminal Penalties for Parental Theft of Money: If there are no laws passed preventing banks from denying access to independent checking accounts to minors, then the bare minimum should prevent parents from stealing this money. Laws should be passed to make it so parents removing their child’s money from their account, without consent, is illegal (even if the account is a “teen account”). This would protect minors against theft, and give them some semblance of control over their income.
Conclusion
Rules related to financial discrimination for youth are mostly decided by banks, credit card companies, and state laws. Although these systems are placed in hopes to protect youth, they can instead slow financial independence and open young people up to dangerous situations where their earned income could be stolen from them by oppressive parents. Giving young people the opportunity to manage their own money and build credit, independently of their parents while teaching them the importance of making safe financial choices is a more effective approach.
Through advocating for fair and clear financial policies, NYRA hopes to give young people more control over their money and financial decisions while removing unnecessary control from parents and financial companies.
