Yes, but you cannot open it in your baby's name alone

You can open a bank account for your baby, but the account must be in your name as the parent or guardian—your baby cannot be the sole account holder. Banks require the account owner to be an adult who can sign documents and take legal responsibility for the account. What you can do is open a custodial account, a savings account, or a joint account where you are the primary owner and your baby is listed as a beneficiary or secondary account holder.

The account belongs to you legally, but you hold it for your baby's benefit. You control all deposits, withdrawals, and decisions about the money until your child reaches the age of majority—usually 18 or 21, depending on your state and the account type. At that point, the money and control transfer to your child.

Key Takeaways

  • You must be the account owner; your baby cannot open or own an account independently.
  • A custodial account under the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) lets you invest and save in your child's name for tax purposes.
  • A regular savings account in your name with your baby listed as a beneficiary is simpler and requires fewer documents.
  • Money in a custodial account belongs to your child and may affect financial aid decisions later.
  • You will need your baby's Social Security number and birth certificate to open any account.

Custodial accounts versus regular savings accounts

A custodial account is opened under your child's name but managed by you as the custodian. The account is funded with gifts or transfers of money that legally belong to your child from the moment they are deposited. This is different from a regular savings account in your name, where the money is yours and you are simply saving it for your child.

Custodial accounts are governed by either the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA), depending on your state. Both allow you to invest the money, not just save it—you can buy stocks, bonds, or mutual funds in your child's name. The account has tax advantages: the first portion of earnings each year is taxed at your child's rate (usually lower than yours), though earnings above a certain threshold are taxed at your rate.

A regular savings account in your name with your baby as a beneficiary is simpler. You open it like any other account, deposit money, and name your child as the beneficiary. The money stays yours until you die or transfer it. This account does not have the same tax benefits, but it is easier to manage and does not trigger the same financial aid complications later.

Documents and information you will need

To open any account for your baby, bring your baby's Social Security number and birth certificate. You will also need your own government-issued ID and Social Security number. Some banks may ask for proof of address, such as a utility bill or lease.

For a custodial account, the bank will ask you to specify whether you want to open it under UTMA or UGMA rules (your state may only allow one). You will sign paperwork naming yourself as the custodian. For a regular savings account, you simply list your baby as a beneficiary on the account registration form.

If your baby does not yet have a Social Security number, you can apply for one at your local Social Security office or online through the Social Security Administration website. The process takes about two weeks. Some banks will let you open the account and add the number later, but most require it upfront.

What happens when your child turns 18 or 21

The age at which your child takes control of a custodial account depends on your state and the account type. Most states set the age at 18 for UGMA accounts and 21 for UTMA accounts, though some allow you to choose an age between 18 and 25 when you open the account. Check your state's rules before opening.

Once your child reaches that age, the account is legally theirs. You lose all control and cannot withdraw money or make decisions about it. If you want to delay your child's access to the money, a custodial account is not the right tool—you would need a trust instead, which requires an attorney to set up.

A regular savings account in your name does not automatically transfer. You can choose to give your child access, transfer the money to them, or keep it. There is no legal deadline.

How custodial accounts affect financial aid and taxes

Money in a custodial account is considered your child's asset, not yours. When your child applies for federal student aid (through the FAFSA), the account is counted as their asset and reduces the amount of aid they may receive. Parent-owned accounts are treated more favorably in aid calculations, so a custodial account can cost your child thousands in financial aid may be able to access.

For taxes, earnings in a custodial account above a certain threshold (which changes yearly) are taxed at your rate, not your child's. The first portion of earnings is usually tax-free or taxed at your child's lower rate. You will receive a 1099 form each year if the account earns interest or investment income, and you will report it on your tax return.

A regular savings account in your name avoids both of these issues. The money is your asset for financial aid purposes, and you pay tax on any earnings. This makes it simpler for families planning to use financial aid later.

Where to open an account for your baby

Most banks and credit unions offer both custodial and regular savings accounts for minors. Call ahead or check the bank's website to confirm they offer custodial accounts and which type (UTMA or UGMA) they support. Some online banks do not offer custodial accounts, so you may need to use a brick-and-mortar bank or credit union.

Ask about minimum balance requirements, monthly fees, and interest rates. Many banks waive fees for minor accounts or offer higher rates on savings accounts for children. Some offer debit cards or allow you to set up automatic transfers, which can help you save consistently.

If you already have an account at a bank, opening an account for your baby there is usually faster—the bank already has your information on file.

Frequently Asked Questions

Can I withdraw money from my baby's custodial account?

Yes, but only for expenses that directly benefit your child—education, medical care, housing, or other necessities. You cannot withdraw money for your own use. If you do, the IRS may treat it as a taxable gift or income to you. Keep records of what the money was used for.

What if I want to change who manages the account later?

With a custodial account, you can name a successor custodian (usually a spouse or trusted family member) who takes over if you die or become unable to manage it. You set this up when you open the account. A regular savings account can be transferred to anyone you name as beneficiary.

Does my baby need a debit card?

No. Most banks do not issue debit cards for accounts in a child's name until they are older (usually 13 or older). You can deposit and withdraw money using your own access to the account. Some banks offer teen checking accounts with debit cards once your child is a teenager.

Can I open multiple accounts for my baby?

Yes. You can open a custodial account at one bank and a regular savings account at another. There is no legal limit, though having multiple accounts makes tracking and managing the money more complicated. Most families use one account per child.

What happens if I die before my child turns 18?

The successor custodian you named takes over management of the account. If you did not name one, the court may appoint a guardian to manage it. The money stays in the account and transfers to your child at the age set by your state's law. A regular savings account goes to whoever you named as beneficiary.