Yes, you can open a savings account for a newborn, and you'll be the account owner

You can open a savings account in your newborn's name at most banks and credit unions. You will be the account owner and custodian — your child cannot sign documents or make withdrawals until they reach the age of majority (usually 18). The account belongs to your child legally, but you control it until then.

The main reason parents open these accounts is to set money aside for their child's future without mixing it with household funds. Some accounts offer higher interest rates for children's savings, and some parents use them to teach money habits later on. You can deposit money whenever you want, and the account will earn interest over time.

Key Takeaways

  • You can open a custodial savings account at most banks and credit unions using your newborn's Social Security number and your own identification.
  • You are the legal owner and custodian until your child turns 18, at which point the account becomes theirs to control.
  • Minimum deposits and monthly fees vary by bank — some have no minimum and no fees, while others require $25 or more to open.
  • Money in a custodial account may affect your child's financial aid may be able to access later, since it counts as their asset rather than yours.
  • You can withdraw money from the account at any time, though some banks restrict how often you can withdraw without penalty.

What you need to open the account

You will need your newborn's Social Security number. If your child does not have one yet, you can request it from the Social Security Administration or apply for one at the hospital before you leave. The process takes a few days to a few weeks by mail, or you can apply online at ssa.gov.

You will also need your own government-issued ID and proof of address (usually a recent utility bill or lease). Some banks ask for the child's birth certificate as well. Call the bank before you go in to confirm what documents they want — requirements vary.

Most banks let you open a custodial account online, by phone, or in person. Online is usually fastest if the bank accepts it. In-person gives you a chance to ask questions about fees and interest rates specific to that bank.

Types of accounts and how interest works

A savings account is the most common choice. Money sits there, earns interest, and you can withdraw it whenever you need to. Interest rates on savings accounts are currently low — usually between 0.01% and 5% depending on the bank and account type. A high-yield savings account pays more interest but may require a higher minimum balance.

A money market account is similar to a savings account but often pays slightly higher interest in exchange for a higher minimum balance (sometimes $2,500 or more). You can withdraw money, but there are usually limits on how many withdrawals you can make per month.

A certificate of deposit (CD) locks your money away for a set time — usually three months to five years — and pays a fixed interest rate. You cannot withdraw the money early without paying a penalty. CDs pay more interest than savings accounts, but your money is not available if you need it.

Interest is calculated daily or monthly and added to the account. The longer money sits in the account, the more interest it earns. At current rates, $1,000 in a high-yield savings account earning 4% would grow to about $1,040 after one year.

Fees and minimum balances vary by bank

Some banks charge a monthly maintenance fee ($5 to $15 is common), while others charge no fee at all. Some waive the fee if you keep a minimum balance or set up direct deposit. A few banks have no minimum balance requirement and no monthly fee — these are worth seeking out if you plan to start small.

Overdraft fees apply if you try to withdraw more than the account holds, though this is unlikely with a custodial account since you control deposits. Some banks charge a fee if you exceed a certain number of withdrawals per month (usually six for savings accounts). Read the fee schedule before you open the account so you know what to expect.

How a custodial account affects financial aid later

Money in a custodial savings account counts as your child's asset when they apply for federal student aid in college. This can reduce the amount of aid they receive, because the government assumes your child should use their own savings first before borrowing or receiving grants.

The impact depends on how much is in the account and what other assets your child has. A few thousand dollars in a custodial account will reduce aid may be able to access more than the same amount in a parent-owned account. If you expect your child to need financial aid, talk to a financial advisor about whether a custodial account makes sense for your situation.

What happens when your child turns 18

At age 18 (or the age of majority in your state, which is sometimes 19 or 21), the account becomes your child's to control. You no longer have authority over withdrawals or deposits. The bank will send your child information about their new rights and responsibilities.

Some banks automatically convert the account to a standard adult account. Others require your child to come in and sign new paperwork. The money stays in the account and continues to earn interest unless your child closes it or moves the money elsewhere.

You can talk to your child before they turn 18 about what the account is for and what you hope they will do with it, but you cannot force them to keep the money there or use it for a particular purpose once they own it.

Alternatives to a custodial savings account

A 529 college savings plan is a tax-advantaged account designed specifically for education expenses. Money grows tax-free if used for tuition, room and board, or other may have access to education costs. If your child does not go to college, you can transfer the money to another family member's 529 plan or withdraw it (though you will owe taxes and a penalty on the earnings).

A Coverdell Education Savings Account (ESA) works similarly to a 529 but has lower contribution limits ($2,000 per year) and more investment options. It can be used for K-12 expenses as well as college.

A regular savings account in your own name keeps the money separate from household spending but counts as your asset, not your child's, for financial aid purposes. This can be an advantage if your child will need aid later.

A custodial brokerage account lets you invest in stocks, bonds, and mutual funds on your child's behalf. It offers more growth potential than a savings account but carries more risk and requires more active management.

Frequently Asked Questions

Do I need a Social Security number before I can open the account?

Yes. If your newborn does not have one yet, you can request it before leaving the hospital or apply online at ssa.gov. The process usually takes a few days to a few weeks. Some banks will let you open the account and add the Social Security number later, but most require it upfront.

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

Yes, you can withdraw money at any time since you are the custodian. However, the money legally belongs to your child, so it should be used for their benefit. Withdrawing money for your own personal expenses could create tax or legal issues later.

What happens if I put money in the account and then need it back?

You can withdraw it. There is no rule preventing you from taking money out of a custodial account. However, if you withdraw money that was meant to be a gift to your child, you may want to document that it was a loan to yourself, not a withdrawal from their savings.

Will the account hurt my child's chances of getting financial aid?

It may reduce the amount of aid they receive, since the government counts it as your child's asset. The impact depends on how much is in the account. If you expect your child to need aid, consider whether a 529 plan or a parent-owned account might work better for your situation.

Can I open multiple accounts for my child at different banks?

Yes. There is no limit on how many custodial accounts you can open. Some parents open one account for long-term savings and another for money they plan to use sooner, or they shop around for the best interest rate and lowest fees.