Greenlight is both, but it works differently than a traditional bank account

Greenlight is a custodial account — meaning a parent or guardian controls it on behalf of a child — that combines features of both checking and savings. The account comes with a debit card for spending (the checking part) and a savings feature where money can sit and earn interest (the savings part). But because Greenlight is designed specifically for families teaching kids about money, it does not work exactly like the checking or savings accounts you might have at a traditional bank.

The key difference: Greenlight is not a bank itself. It is a financial service built on top of a bank's infrastructure. Your money is held at a real bank — currently Sutton Bank — so it is insured the same way a regular checking account would be. But the way you access and manage the money is through the Greenlight app, not a traditional bank branch or website.

Key Takeaways

  • Greenlight combines a debit card for spending with a savings feature, so it functions as both a checking and savings account in one.
  • The account is custodial, meaning a parent controls it and can set spending limits, approve purchases, or block certain stores.
  • Money in Greenlight is held at Sutton Bank and covered by FDIC insurance, the same protection a regular bank account has.
  • Greenlight charges a monthly subscription fee (not free like many bank accounts), and the savings feature earns interest at rates that vary by account type.

How the checking part works

The checking side of Greenlight is the debit card. Your child receives a physical card and can use it to spend money at stores, online, or at ATMs — just like a regular checking account debit card. The parent controls how much money is available to spend and can set rules: some parents allow spending anywhere, while others restrict certain categories like fast food or gaming.

Unlike a traditional checking account, there is no checkbook and no check-writing option. Greenlight is designed for digital spending only. The parent can see every transaction in real time through the app, which is the main reason many families choose it — transparency and the ability to teach spending habits as they happen.

How the savings part works

Greenlight also includes a savings feature where money can be set aside and earn interest. A parent can transfer money from the spending balance into savings, and the child can see it grow. The interest rate varies depending on which Greenlight plan you have — the basic plan earns a lower rate, while the premium plan (Greenlight+) earns a higher rate.

The savings feature is optional. Some families use only the debit card spending side and ignore savings entirely. Others use it as a teaching tool, moving money into savings and showing their child how interest works over time. Unlike a traditional savings account, you cannot set withdrawal limits or lock the money away — the parent can move it back to spending whenever needed.

The monthly cost and FDIC protection

Greenlight charges a monthly subscription fee. The basic plan costs less than the premium plan, which includes higher interest rates on savings and additional features. This is different from many traditional checking accounts, which are free.

Your money is protected by FDIC insurance up to $250,000, the same way it would be at any bank. This means if Sutton Bank (the bank holding the money) fails, your deposits are insured. Greenlight itself is not a bank, so it does not provide FDIC insurance — but because the money sits at Sutton Bank, the insurance applies automatically.

When to use Greenlight versus a traditional account

Greenlight makes sense if you want a teaching tool with parental controls and real-time visibility into your child's spending. The monthly fee is worth it for families who value the oversight and the ability to set spending rules.

A traditional checking account at a bank might be better if you want a free account with no monthly cost, or if your child is older and wants full independence without parental approval on purchases. Some teens prefer a regular bank account because they do not have to ask permission to spend their own money.

You can also use both: some families open a Greenlight account for a younger child and switch to a traditional bank account as the child gets older.

How Greenlight compares to other teen banking options

Several other companies offer similar custodial accounts: Fidelity Youth Account, Step, and Copper are examples. Each has different fee structures, interest rates, and parental control features. Some are free, while others charge monthly fees like Greenlight does. The choice depends on what matters most to your family — cost, features, or the specific teaching approach.

If you already have a checking account at a traditional bank, you might also consider opening a savings account for your child at the same bank instead of using a separate service like Greenlight. Many banks offer free teen checking accounts with limited parental controls. The trade-off is less oversight but no monthly fee.

Frequently Asked Questions

Can I use Greenlight as my only account, or do I need a regular bank account too?

Greenlight can be your child's only account. It functions as both checking and savings, and the debit card works anywhere Mastercard is accepted. However, some families keep a traditional bank account as a backup or for specific purposes like direct deposit from a job.

Does Greenlight report to credit bureaus?

No. Greenlight is a custodial account, not a credit product, so it does not build credit history. If your child wants to start building credit, they would need a different product, like a secured credit card or becoming an authorized user on a parent's credit card.

What happens to the account when my child turns 18?

Greenlight allows you to transition the account as your child ages. You can gradually reduce parental controls, and eventually the account can become fully independent. The specific process depends on Greenlight's current policies, so check their website or app for details about the transition.

Can my child withdraw cash from the Greenlight debit card?

Yes. The debit card works at ATMs, so your child can withdraw cash just like with a regular checking account. The parent can see the withdrawal in the app and can set limits on how much cash can be withdrawn if desired.

Is the interest rate on Greenlight savings competitive?

Greenlight's savings rates are lower than what you would find at a high-yield savings account at an online bank. If earning interest is your main goal, a traditional savings account elsewhere might offer better rates. Greenlight's value is in the teaching and control features, not the interest earnings.