Most banks require you to be 18 to open a high yield savings account in your own name

You must be at least 18 years old to sign a contract with a bank, and that is what opening an account requires. A few banks will let you open one at 17 if you are emancipated or have a court order, but this is rare and you will need to bring documentation. If you are under 18, your options are a custodial account (opened by a parent or guardian in your name) or waiting until you turn 18.

High yield savings accounts are offered by online banks and some traditional banks. They pay interest rates that change with the market — currently ranging from 4% to 5.35% depending on the bank and the day you check. The rate you see today may be different next month. You do not need a minimum balance to open most of them, though some banks require $25 or $100 to start.

Key Takeaways

  • You must be 18 to open a high yield savings account by yourself; under 18, you need a parent or guardian to open a custodial account.
  • A custodial account lets you save money and earn interest, but the adult on the account can withdraw funds and has legal control until you reach the age of majority (18 or 21, depending on your state).
  • Once you turn 18, you can open your own account at an online bank or credit union without needing a parent's permission or signature.
  • High yield savings rates change frequently, so the rate advertised when you open the account may be lower or higher in three months.

How custodial high yield savings accounts work

A custodial account is opened by a parent, guardian, or other adult in your name. You can deposit money into it, watch it grow with interest, and withdraw from it — but the adult named as custodian has the legal right to access the account and make decisions about it. The custodian is responsible for reporting the interest you earn on their tax return until you reach the age of majority in your state.

When you turn 18 (or 21 in some states), the account converts to a regular account in your name alone, or you can transfer the money to a new account you open yourself. Some banks make this transition automatic; others require you to contact them. Check with the bank before you open the account to understand what happens at that age.

Not all banks offer custodial high yield savings accounts. Online banks like Marcus, Ally, and American Express Personal Savings do not. Credit unions and traditional banks like Chase and Bank of America may offer them, though their rates are usually lower than online banks. You will need to call or visit in person to ask whether they have a custodial version.

What you need to open an account at 18

Once you turn 18, you can open a high yield savings account online in minutes. You will need a valid government ID (driver's license, passport, or state ID), your Social Security number, and a way to fund the account — usually a debit card or bank transfer from another account. Some banks ask for your employment information, but it is not required.

You do not need a credit card, a minimum deposit, or a parent's permission. The account is yours alone. If you are a student, some banks offer student checking accounts with higher rates or no fees, though these are separate from high yield savings accounts.

Comparing high yield savings rates for teens and young adults

High yield savings rates are not fixed. They move up and down based on what the Federal Reserve does with interest rates. When you open an account, the bank shows you the current rate, but that rate may drop in a few months. Some banks lower rates faster than others when the Fed cuts rates.

Online banks typically offer the highest rates because they have lower overhead costs. As of early 2024, rates at online banks ranged from 4% to 5.35%, while traditional banks often paid 0.01% to 0.5%. The difference matters: on $1,000, you might earn $40 to $50 per year at an online bank versus $0.10 to $5 at a traditional bank. Check the current rates at the banks you are considering before you decide.

Some banks offer promotional rates for new customers — a higher rate for the first few months, then a drop. Read the fine print to see when the rate changes and what the regular rate will be after that.

Moving from a custodial account to your own account

When you turn 18, you have choices. You can keep the custodial account and ask the bank to remove the custodian's name, leaving you as the sole owner. You can open a new high yield savings account at a different bank and transfer the money over. Or you can do both — keep the old account and open a new one.

If you transfer money between banks, the process usually takes three to five business days. You will need the routing number and account number of the account you are transferring from. Most banks let you start a transfer online; some require a phone call or a visit in person.

Before you move your money, compare the rates at your current bank and the new bank. If your current bank's rate is competitive, staying put saves you the hassle of a transfer. If another bank is paying significantly more, the transfer is worth doing.

What happens to interest earned before you turn 18

Interest you earn in a custodial account is taxable income. The custodian (usually a parent) reports it on their tax return, not yours. If the interest is under $1,300 per year, it is typically not taxed at all because of the standard deduction. Above that amount, it may be taxed at your parent's rate or your own rate, depending on your total income and your state's rules.

Once you turn 18 and the account becomes yours, you report the interest on your own tax return. The bank will send you a 1099-INT form if you earned $10 or more in interest during the year. Keep that form with your tax records.

Frequently Asked Questions

Can I open a high yield savings account at 16 or 17?

No, not in your own name. You need a parent or guardian to open a custodial account for you. A few banks allow 17-year-olds to open accounts if they are emancipated, but this requires court documentation and is uncommon. Contact the bank directly to ask.

Do I need a job or income to open a high yield savings account?

No. Banks do not require proof of income or employment to open a savings account. They ask for your Social Security number and ID to verify your identity, not to check your income. You can open an account whether you work or not.

What is the difference between a high yield savings account and a regular savings account?

High yield savings accounts pay much higher interest rates — currently 4% to 5.35% at online banks, compared to 0.01% to 0.5% at traditional banks. The tradeoff is that high yield accounts are usually at online-only banks with no physical branches. Both are safe because deposits are insured by the FDIC up to $250,000.

Can I withdraw money from a high yield savings account whenever I want?

Yes, but there are limits. Federal rules allow six withdrawals per month from a savings account before the bank can charge a fee or close the account. Most banks no longer enforce this strictly, but it is still in the rules. Checking accounts have no withdrawal limits.

Will opening a high yield savings account hurt my credit score?

No. Opening a savings account does not affect your credit score at all. Banks do a soft credit check to verify your identity, but it does not show up on your credit report. Only borrowing money (credit cards, loans) affects your credit score.