What you need to open a child's savings account

You can open a savings account for a child at most banks and credit unions, but the process depends on the child's age. For children under 18, a parent or legal guardian must open and manage the account — the child cannot do it alone. You will need your own government-issued ID, proof of address (usually a recent utility bill or lease), and the child's Social Security number or Individual Taxpayer Identification Number.

Some banks let you open an account for a child as young as newborn; others require the child to be at least 13 or 16. A few banks offer custodial accounts (also called UTMA or UGMA accounts in some states), which are legally owned by the child but controlled by you until they reach the age of majority — typically 18 or 21, depending on your state and the account type. Standard joint accounts are simpler: you and the child both own the money, and either of you can withdraw it.

The main difference between account types matters if you plan to leave the money untouched for years. Custodial accounts have tax advantages for larger balances, but once the child turns 18 or 21, the money becomes theirs to spend however they want. Joint accounts stay under your control as long as you are the account holder, but they may affect financial aid calculations if the child later attends college.

Key Takeaways

  • You need your ID, proof of address, and the child's Social Security number to open an account; the child does not need to be present at most banks.
  • Custodial accounts transfer to the child at age 18 or 21 (depending on your state), while joint accounts remain under your control.
  • Interest rates on children's savings accounts are typically low, so compare banks before opening — some offer higher rates for accounts with regular deposits.
  • Once the account is open, you can set up automatic transfers from your own account to teach the child about saving without handling cash.

Where to open the account

Banks, credit unions, and online banks all offer children's savings accounts. Traditional banks (Chase, Bank of America, Wells Fargo) have branches in most cities, so you can walk in with your documents and open an account the same day. Credit unions often have lower fees and sometimes higher interest rates, but you must be a member — membership usually requires living or working in a specific area or belonging to a particular employer or organization.

Online banks (Ally, Marcus, Discover) have no branches, but they typically offer higher interest rates than brick-and-mortar banks because they have lower overhead costs. The tradeoff is that you cannot deposit cash in person; you deposit by transfer from another account or by mailing a check. Online banks are a good choice if you plan to fund the account through automatic transfers from your own account.

Some banks offer special children's accounts with perks like no monthly fees, no minimum balance, or a slightly higher interest rate. Others charge a monthly maintenance fee ($5 to $10) unless you maintain a minimum balance or set up direct deposit. Read the fee schedule before you choose — a $5 monthly fee costs $60 a year, which can wipe out the interest a small account earns.

Documents and information to bring

Bring your government-issued ID (driver's license, passport, or state ID) and a recent document showing your current address — a utility bill, lease, mortgage statement, or bank statement dated within the last 60 days usually works. You will also need the child's Social Security number. If you do not have it, you can request one from the Social Security Administration before opening the account, though the process takes a few weeks.

Some banks ask for the child's date of birth and full legal name as it appears on their birth certificate. If you are opening a custodial account, the bank may ask which state you live in, because the rules for custodial accounts vary by state. Have your own account information ready too — banks often ask for your account number at another institution to verify your identity, though this is not required.

If you are opening the account online, you will upload photos of your ID and address proof through the bank's website or app. The process usually takes 10 to 15 minutes, and the account opens within one to three business days. Some online banks send a debit card by mail; others let you link the account to your existing account immediately.

Choosing between a joint account and a custodial account

A joint account is the simplest option. You and the child are both owners, and either of you can deposit or withdraw money. The account stays in your name on the bank's records, and you control it completely. When the child turns 18, they can request their own debit card or withdraw the money, but the account does not automatically transfer to them. Joint accounts work well if you want to save money for the child's near-term needs — a school trip, a car, college expenses — and you want to keep control until they are ready.

A custodial account (UTMA or UGMA, depending on your state) is legally owned by the child from day one, but you manage it as the custodian. When the child reaches the age of majority (18 in most states, 21 in others), the account automatically becomes theirs, and you lose all control. Custodial accounts have a tax advantage: the first $1,250 of earnings (as of 2024) is tax-free, and the next $1,250 is taxed at the child's rate, which is usually lower than yours. If the account has more than $2,500 in earnings, the excess is taxed at your rate. This advantage matters only if the account is large enough to earn significant interest.

Custodial accounts can affect financial aid if the child attends college, because the money is considered the child's asset rather than yours. Joint accounts are considered your asset, so they have less impact on aid calculations. If you think the child might receive need-based financial aid, a joint account may be the better choice.

Setting up deposits and teaching saving habits

Once the account is open, you can fund it by transferring money from your own account, depositing cash at a branch (if it is a bank with physical locations), or mailing a check. Many parents set up an automatic transfer — for example, $25 every two weeks — so the account grows without requiring a decision each time. Automatic transfers also teach the child that saving is a regular habit, not something you do only when you remember.

Some banks let you set savings goals within the app — for example, "Save $500 for a bike by June." The child can watch the balance grow toward the goal, which makes saving feel concrete rather than abstract. Other banks offer small bonuses (usually $5 to $25) if the child makes a certain number of deposits in a month, which can motivate regular saving.

As the child gets older, you can involve them in the account. Many banks let you add a debit card when the child turns 13 or 16, so they can make withdrawals themselves. Some parents use this as a teaching tool: the child earns money through chores or work, deposits it into the account, and watches it grow. Others set a rule that the child can withdraw only for specific purposes (school supplies, entertainment) to reinforce the difference between saving and spending.

Interest rates and how they affect the account

Children's savings accounts earn interest, but the rate varies widely. As of 2024, traditional banks typically offer 0.01% to 0.05% annual interest, while online banks and credit unions often offer 4% to 5%. The difference is significant: $1,000 in a traditional bank account earns about $0.50 per year, while the same amount in a high-yield account earns $40 to $50 per year.

Interest is calculated daily and paid monthly or quarterly, depending on the bank. The more often interest is compounded (paid), the faster the balance grows, though the difference is small for low balances. A $1,000 account earning 4.5% compounded daily grows to about $1,046 after one year; compounded monthly, it grows to about $1,045.84. The difference is less than $1, but over many years it adds up.

Some banks offer higher rates for children's accounts than for adult accounts, as an incentive to open accounts early. Others offer a promotional rate for the first few months, then drop to a lower rate. Read the terms carefully — a bank advertising "5% interest" might offer that rate only on the first $500, with a lower rate on the rest. Compare the rates at three or four banks before you decide, because choosing a high-yield account over a low-yield one can mean hundreds of dollars in extra interest over 10 years.

What happens when the child turns 18

If you opened a joint account, nothing happens automatically. The account stays open, and the child can continue using it. You can remove yourself as an owner if you want, or you can leave the account as-is. Some banks require you to convert the account to an adult account once the child turns 18, but this is usually just a name change — the money stays where it is.

If you opened a custodial account, the bank will contact you when the child approaches the age of majority (usually a few months before). At that point, the account converts to a regular account in the child's name, and you lose access. The child can then manage the account however they want. Some banks offer a grace period where you can request an extension if the child is still in school, but this varies by bank and state.

Before the account converts, talk to the child about what they plan to do with the money. Some parents and children agree to leave the money untouched for college or a first car; others agree the child can spend it freely. Having this conversation ahead of time prevents surprises or conflict.

Frequently Asked Questions

Can I open a savings account for a child without their Social Security number?

Most banks require a Social Security number to open an account. If the child does not have one, you can request it from the Social Security Administration before opening the account — the process takes two to four weeks. Some banks will let you open an account with an Individual Taxpayer Identification Number (ITIN) instead, though this is less common.

What is the difference between a savings account and a money market account for a child?

A money market account usually requires a higher minimum balance (often $2,500 or more) and offers a slightly higher interest rate. For most children, a regular savings account is simpler and has no minimum balance. Money market accounts are worth considering only if you plan to deposit a large amount and leave it untouched for years.

Will a child's savings account affect their financial aid for college?

Yes, but the impact depends on the account type. Money in a joint account is considered your asset and has minimal impact on aid. Money in a custodial account is considered the child's asset and can reduce aid by up to 20% of the account balance. If you expect the child to receive need-based aid, a joint account is usually the better choice.

Can I withdraw money from my child's savings account whenever I want?

In a joint account, yes — you are both owners, so either of you can withdraw. In a custodial account, you can withdraw only for the child's benefit (education, medical care, living expenses). Withdrawing for your own use is technically illegal, though enforcement is rare. If you think you might need to access the money for your own expenses, a joint account is the safer choice.

What happens if the child loses the debit card?

Contact the bank immediately and request a replacement card. Most banks can issue a new card within three to five business days. In the meantime, the child can still access the account through the bank's app or by visiting a branch. The old card is deactivated as soon as you report it lost, so no one else can use it.