You need the child's Social Security number, birth certificate, and a parent or guardian's ID and signature

Most banks will let you open a savings account for a grandchild under age 18, but the account must have a parent or legal guardian as a co-owner or custodian. You cannot open an account in only the child's name. The bank treats this as a custodial account—the adult is legally responsible for the money until the child reaches the age of majority (usually 18 or 21, depending on your state).

Bring the child's Social Security number, birth certificate, and proof of the parent or guardian's identity. Some banks also ask for proof of address. If you are the grandparent but not the custodian, the parent or guardian must be present or sign a form authorizing you to open the account on their behalf. Call the bank ahead of time to ask what they require—requirements vary by institution.

You can open the account in person at a branch, by mail with some banks, or online if the bank allows it. Online options are fastest, but many banks still require at least one in-person visit or a notarized form when a minor is involved.

Key Takeaways

  • A parent or legal guardian must be a co-owner or custodian on any savings account opened for a grandchild under 18.
  • You will need the child's Social Security number and birth certificate, plus the parent or guardian's ID and signature.
  • Custodial accounts let the child own the money but give the adult legal control until the child reaches age of majority.
  • Some banks allow online opening, but many require an in-person visit or notarized documents when a minor is involved.
  • The money in a custodial account counts as the child's asset for financial aid purposes, which may reduce aid the child receives later.

Custodial accounts versus UTMA and UGMA accounts

A basic custodial savings account is the simplest option. The parent or guardian is the custodian, the child's name is on the account, and the money belongs to the child. The adult can withdraw money for the child's benefit (education, medical care, living expenses) but cannot take it for personal use. When the child reaches age of majority, the account transfers to them and they have full control.

UTMA (Uniform Transfers to Minors Act) and UGMA (Uniform Gifts to Minors Act) accounts are a more formal version. These are custodial accounts set up under state law, and they allow you to transfer money or assets to a minor without creating a trust. The rules are similar—the custodian manages the account until the child reaches age of majority—but UTMA and UGMA accounts can hold investments like stocks and mutual funds, not just cash. Not all banks offer these; you may need to work with a brokerage or investment firm.

For a straightforward savings account where you want to set aside money for a grandchild's future, a basic custodial account at a bank is usually enough. UTMA or UGMA makes sense if you plan to invest the money or transfer a larger sum.

What to expect from interest rates and fees

Savings accounts for minors often pay the same interest rate as adult accounts at the same bank, though some banks offer slightly higher rates on youth accounts. Interest rates vary widely—from nearly 0% at some large banks to 4% or higher at online banks and credit unions. Shop around before opening the account, because the difference compounds over time.

Many banks waive monthly maintenance fees on youth accounts or require a low minimum balance (often $25 or less). Some charge a fee if the balance drops below a certain level. Read the fee schedule before you commit. A few banks charge a fee to add money to the account or to withdraw it, which can eat into the savings.

Ask the bank whether the account will convert to a standard adult account when the child reaches age of majority, and whether the interest rate or fees will change at that time. Some banks automatically switch accounts and may lower the rate or add fees once the child is an adult.

How to fund the account and set spending rules

You can deposit money into the account by transferring funds from your own bank account, depositing a check, or making a cash deposit at a branch. Many banks allow you to set up automatic transfers—for example, $25 per month on the child's birthday—so the account grows steadily without you having to remember to deposit each time.

Decide with the parent or guardian whether the child will have a debit card or online access to the account. Some banks issue debit cards for minors; others restrict access until the child is older. If the child has access, you can set spending limits or require the parent to approve withdrawals. These controls vary by bank, so ask what options are available.

Talk to the parent or guardian about the purpose of the account. Is it for the child to learn about saving, or is it a college fund you plan to contribute to over time? If it is a college fund, be aware that the money counts as the child's asset for financial aid purposes, which may reduce the amount of aid the child receives later. A 529 college savings plan or a trust might be better if you want to avoid that impact, but those are more complex to set up.

Tax reporting and the child's tax return

Interest earned in a custodial savings account is taxable income to the child, not to you. The bank will send a 1099-INT form each year if the interest exceeds $10. The child (or the parent, if the child is too young) must report this on a tax return.

For 2024, a child with less than $1,300 in interest income does not have to file a federal tax return. If the child has other income (from a job, for example), the threshold is higher. The parent should check the IRS rules each year, because these thresholds change. If the child does have to file, the parent typically files on the child's behalf until the child is old enough to do it themselves.

Keep records of the account statements and 1099 forms. If you contribute a large sum to the account, make sure the parent understands that the interest belongs to the child for tax purposes, not to you.

What happens when the child turns 18 or 21

When the child reaches age of majority (18 in most states, 21 in a few), the custodial account automatically transfers to the child's full control. The child can then withdraw all the money, close the account, or keep it open. You no longer have any legal authority over the account.

Some banks require the child to visit a branch or sign new paperwork to take over the account. Others handle the transfer automatically. Ask the bank what the process is before the child reaches age of majority, so you can prepare them for what happens next.

If you want the money to stay invested or to be used for a specific purpose (like college), talk to the child about your intentions before they take control. Once they own the account, you cannot tell them how to spend it. If you want more control over how the money is used, a trust or a 529 plan set up with a trustee might be a better choice, but those require legal help to establish.

Frequently Asked Questions

Can I open a savings account for my grandchild without the parent's permission?

No. The parent or legal guardian must be a co-owner or custodian on the account. If you want to set aside money for the grandchild without involving the parent, you would need to set up a trust with a lawyer, which is more expensive and complex. A custodial account requires the parent's involvement and signature.

What if the parent and I disagree about how the money should be used?

The parent or guardian is the custodian and has legal authority over the account. If you are not the custodian, you cannot withdraw money or make decisions about it. Before you deposit money, make sure you and the parent agree on the purpose. If you want to protect the money for a specific use, discuss that with the parent in writing.

Can I name my grandchild as the beneficiary of my savings account instead of opening a separate account?

Yes, you can name your grandchild as a beneficiary on your own account, and the money will go to them when you pass away. However, that does not let you set aside money for them during your lifetime. A custodial account lets you give money to the grandchild now while you are alive, and the grandchild owns it immediately.

Does money in a custodial account affect my taxes or my benefits?

No. Once you deposit money into a custodial account in the child's name, it belongs to the child, not to you. It does not count as your income or your asset for tax or benefit purposes. However, it does count as the child's asset, which may affect financial aid later.

What if I want to withdraw money from the account?

You cannot withdraw money for your own use. The custodian can only withdraw money for the child's benefit—education, medical care, living expenses. If you need the money back, you would have to ask the custodian (usually the parent) to withdraw it, and they would have to agree that it is for the child's benefit. This is why you should only deposit money you are truly willing to give to the grandchild.