E*TRADE does not offer a custodial checking account for minors
E*TRADE, owned by Morgan Stanley, does not have a checking account product designed for minors or custodians. The company focuses on brokerage and investment accounts, not deposit banking. If you are looking for a checking account where a parent or guardian can manage money for a minor, you will need to look at banks and credit unions instead.
E*TRADE does offer a custodial brokerage account — a different product that lets a parent or guardian invest money on behalf of a minor. This is not the same as a checking account. A custodial brokerage account is for buying stocks, mutual funds, and other securities. Money in it is not FDIC insured the way bank deposits are, and you cannot write checks or use a debit card to spend from it the way you can with a checking account.
Key Takeaways
- E*TRADE does not offer custodial checking accounts; it offers custodial brokerage accounts for investing, which is a different product.
- A custodial brokerage account at E*TRADE lets a parent or guardian buy and sell investments on behalf of a minor, but you cannot spend from it like a checking account.
- For a checking account a minor can use, you need a bank or credit union that offers youth checking or custodial deposit accounts.
- Money in a custodial brokerage account is not FDIC insured and is meant for long-term investing, not everyday spending.
What E*TRADE custodial brokerage accounts actually do
If you open a custodial brokerage account at E*TRADE, the parent or guardian (called the custodian) controls the account and makes all investment decisions. The minor's name is on the account, and the account is held under the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA), depending on your state. When the minor reaches the age of majority — usually 18 or 21, depending on your state — they take full control of the account.
These accounts are designed for long-term investing. You can buy stocks, exchange-traded funds (ETFs), mutual funds, and bonds. You cannot write checks, use a debit card, or transfer money to pay bills. If you need to move money out, you have to sell investments first, which can take a few business days to settle.
E*TRADE does charge account maintenance fees and trading commissions on some transactions, so the costs can add up, especially for smaller accounts. Check the current fee schedule on their website before opening an account.
Where to find a custodial checking account instead
Banks and credit unions are the right place to look for a checking account a minor can use with a parent's oversight. Many offer youth checking accounts or custodial checking accounts designed for this purpose. These accounts let the parent monitor spending, set limits, and teach the minor about managing money.
Common banks that offer youth checking include Chase, Bank of America, Wells Fargo, and Ally Bank. Credit unions often have similar products and sometimes charge lower fees. The features vary — some accounts come with a debit card, some have spending limits, and some let the parent set up alerts when the balance drops below a certain amount.
Money in a custodial checking account at a bank or credit union is FDIC insured up to $250,000, which means your money is protected if the bank fails. Money in a brokerage account is not. This is an important difference if safety is a priority.
How custodial accounts work under UTMA and UGMA
Both custodial checking accounts at banks and custodial brokerage accounts at E*TRADE can be set up under UTMA or UGMA, depending on your state. These are laws that let a parent or guardian manage money for a minor without setting up a trust or going to court.
The custodian has full control while the minor is under the age of majority. Once the minor reaches that age — 18 in most states, 21 in a few — the account transfers to them automatically. They then own the money outright and can do whatever they want with it. The custodian has no say after that point.
One thing to know: money in a custodial account is considered the minor's asset, not the parent's. This can affect financial aid calculations for college. If you are concerned about this, talk to a financial planner or tax professional before opening the account.
Comparing custodial checking and custodial brokerage accounts
| Feature | Custodial Checking (Bank) | Custodial Brokerage (E*TRADE) |
|---|---|---|
| Debit card or check writing | Yes, usually | No |
| FDIC insured | Yes, up to $250,000 | No |
| Purpose | Everyday spending and saving | Long-term investing |
| Time to access money | Immediate (debit card) or 1–3 days (transfer) | 2–3 business days (after selling investments) |
| Fees | Often none for youth accounts | Account maintenance and trading fees apply |
| Parent control | Yes, can set spending limits and alerts | Yes, makes all investment decisions |
What happens when the minor turns 18 or 21
When the minor reaches the age of majority in your state, the custodial account automatically converts to an account in their name alone. At a bank, this usually happens without any action needed — the account just changes from "Parent as Custodian for Minor" to the minor's name. At E*TRADE, the same thing happens with the brokerage account.
Once the account is in the minor's name, the custodian has no more control. The young adult can withdraw money, close the account, or do anything else they want with it. If you want to keep helping them manage money after they turn 18, you would need to set up a different arrangement — like a joint account or a power of attorney — and they would have to agree to it.
Frequently Asked Questions
Can a minor open an E*TRADE account on their own?
No. A minor cannot open any account at E*TRADE without a parent or guardian. A custodial account must be opened by the adult, and the minor's name is added as the beneficiary. The adult controls the account until the minor reaches the age of majority.
Can I use a custodial brokerage account to teach my child about investing?
Yes, that is one of the main reasons people open them. A custodial brokerage account lets you buy stocks or funds and show your child how investing works. However, the money is locked into investments and cannot be spent like cash, so it works best for money you plan to leave invested for years.
What is the difference between UTMA and UGMA?
UGMA (Uniform Gifts to Minors Act) is older and covers gifts of cash and securities. UTMA (Uniform Transfers to Minors Act) is newer and covers a wider range of assets, including real estate and intellectual property. Most states use UTMA now, but a few still use UGMA. Your bank or brokerage will tell you which one applies in your state.
Will a custodial account hurt my child's chances of getting financial aid?
Yes, it can. Money in a custodial account is counted as the student's asset on the Free Application for Federal Student Aid (FAFSA), which can reduce the amount of aid they receive. Talk to a financial planner before opening a custodial account if college aid is a concern.
Can I close a custodial account before my child turns 18?
You can close the account, but the money still belongs to the minor. You cannot take it back or use it for yourself. The funds must either stay in the account or be transferred to another custodial account in the minor's name. Once the minor reaches the age of majority, they own the money outright.