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, and the process takes 15 to 30 minutes in person or online. You will need your own government ID, the child's Social Security number or tax ID, and proof of your address (a recent utility bill or lease works). Some banks also ask for the child's birth certificate, though not all require it.
The account will be registered as a custodial account — meaning you control it until the child reaches the age of majority (18 or 21, depending on your state). You sign the paperwork as the custodian, and the child's name appears on the account. The bank will ask you to confirm your relationship to the child (parent, guardian, or authorized representative).
If you are opening the account online, you will upload photos of your ID and the child's Social Security card or birth certificate. If you go in person, bring the originals. Online accounts typically open within one to three business days; in-person accounts are active the same day.
Key Takeaways
- You need your ID, the child's Social Security number, and proof of your address to open a custodial account at a bank or credit union.
- Interest rates on child savings accounts vary widely — from nearly zero at large banks to 4% to 5% at some online banks and credit unions, so comparing rates before opening saves money over time.
- Most custodial accounts have no monthly fees, but some charge if the balance drops below a minimum (often $25 to $100), so read the fee schedule before committing.
- You retain full control of the account until the child reaches 18 or 21; at that age, the account converts to a standard account in the child's name alone.
- Deposits to a child's account do not affect your taxes, but the child may owe taxes on interest earned if it exceeds roughly $1,250 per year (the threshold changes annually).
Where to open the account: banks, credit unions, and online options
Large national banks (Chase, Bank of America, Wells Fargo) offer custodial savings accounts with no monthly fees, but interest rates are typically 0.01% to 0.05% — meaning $100 earns less than a dollar per year. These accounts are convenient if you already bank there and want everything in one place.
Credit unions often pay higher rates (0.5% to 2%) and charge no fees on youth accounts. You must be a member to open an account, which usually requires living or working in a specific area or having a family member who is already a member. Some credit unions let you join online if you meet their field of membership.
Online banks and fintech platforms (Marcus, Ally, Vanguard, Fidelity) typically offer the highest rates — currently 4% to 5.35% on savings accounts — because they have lower overhead costs. These accounts are opened entirely online and take one to three days to activate. The trade-off is that you cannot deposit cash in person; you transfer money from your own bank account or via direct deposit.
Compare rates and fees across at least three options before deciding. A child's account earning 4% instead of 0.05% on $1,000 generates $40 per year rather than 50 cents — a real difference over 10 or 15 years.
Setting up the account in the child's name and yours
The account paperwork will ask you to designate yourself as the custodian and list the child as the account owner. Some banks use the term "minor account" or "youth account" instead. The account title typically reads something like "John Smith, Custodian for Sarah Smith" or "Sarah Smith, a minor, by John Smith, Custodian."
You will provide your own Social Security number and the child's Social Security number. If the child does not have a Social Security number yet, you can obtain one from the Social Security Administration — the process takes about two weeks by mail or can be done in person at a local office. Some banks will let you open the account and add the number later, but most require it upfront.
You will also choose whether the account is UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act). These are legal structures that determine what happens to the money when the child turns 18 or 21. Most banks default to UTMA, which is more flexible. The difference rarely matters for a simple savings account, but ask the bank which one they use so you know what to expect.
Interest rates, fees, and what the account will actually earn
Interest rates on child savings accounts range from nearly 0% at large banks to 5.35% at the highest-paying online banks. The rate your account earns depends on the bank you choose and the current economic environment — rates change as the Federal Reserve adjusts its benchmark rate.
Most banks compound interest daily or monthly, meaning you earn interest on your interest. A $1,000 deposit earning 4.5% compounded daily grows to about $1,046 after one year; at 0.05%, it grows to $1,000.50. Over 10 years, the difference is substantial: $1,000 at 4.5% becomes roughly $1,565, while at 0.05% it becomes $1,005.
Fees are usually zero on child accounts, but some banks charge a monthly maintenance fee ($3 to $5) if the balance falls below a minimum (often $25 to $100). Read the fee schedule before opening. If you plan to start small and add money gradually, choose a bank with no minimum balance requirement.
Some banks offer bonus interest rates for the first few months or if you set up automatic deposits. These promotions are real but temporary — the rate drops after the promotional period ends. Factor in the long-term rate, not the introductory one, when comparing banks.
Depositing money and teaching the child to save
You can deposit money into the account immediately after it opens. At a brick-and-mortar bank, you can deposit cash or a check in person. At an online bank, you transfer money from your own bank account using the routing and account numbers the bank provides — this usually takes one to two business days.
Some banks let you set up automatic transfers from your checking account to the child's savings account on a schedule you choose (weekly, monthly, or on a specific date). This removes the need to remember to deposit money and can help you build a consistent savings habit.
If the child is old enough to understand money, you can involve them in the account. Some banks offer debit cards for youth accounts, letting the child see their balance and make withdrawals (though you retain control and can set spending limits). Others provide online access so the child can log in and watch their balance grow. This hands-on approach teaches the value of saving without giving the child unsupervised access to the money.
You can also link the account to a chore chart or allowance system — for example, depositing $5 per week if the child completes their responsibilities. This creates a concrete connection between effort and savings.
Tax implications and reporting
Money you deposit into the account is not taxable to you — it is a transfer of your own funds, not income. However, interest the account earns may be taxable to the child.
If the child's interest income is less than roughly $1,250 per year (the threshold for 2024; it changes annually), no tax is owed. If interest exceeds that amount, the child may need to file a tax return or you may need to report it on your own return, depending on the total amount and your filing status. A bank will send you a 1099-INT form if interest exceeds $10, which you use to report the income.
For most child savings accounts earning modest interest, this is not a concern. A $5,000 account earning 4.5% generates $225 per year, well below the threshold. But if you are saving a large amount or the child has other income, consult a tax professional or check the IRS website for the current rules.
What happens when the child turns 18 or 21
When the child reaches the age of majority in your state (18 in most states, 21 in a few), the custodial account automatically converts to a standard account in the child's name alone. You lose control and access — the money belongs entirely to the child.
The bank will notify you before this happens, usually 30 to 60 days in advance. Some banks require the child to sign new paperwork or update their information; others handle the conversion automatically. Check with your bank about their specific process.
If you want to discuss what happens to the money after the conversion, have that conversation with the child before their 18th birthday. Some parents and children agree the money will stay in savings for college or a car; others treat it as a gift the child can spend as they wish. The legal outcome is the same either way — once the account converts, the child has full authority.
Frequently Asked Questions
Can I open a savings account for a child I am not the parent of?
Yes, if you are a legal guardian or have documented authorization from the parent. You will need to provide proof of guardianship (a court order) or a notarized letter from the parent naming you as authorized to open the account. Some banks accept this; others require the parent to open the account and add you as an authorized user later. Call the bank first to confirm their policy.
What if I want to move the account to a different bank?
You can close the account at any time and transfer the money to a new bank. The process is the same as moving a regular savings account — provide the new bank with your old account number, and they will initiate the transfer (usually within three to five business days). You do not lose any interest earned up to the closing date.
Can the child access the account without my permission?
Not if you are the sole custodian. You control all withdrawals and transfers. If the bank offers a debit card or online access for the child, you can set limits on how much they can withdraw per day or per transaction. Once the account converts at age 18 or 21, the child has full access and you cannot restrict it.
Does opening a child's savings account affect my credit score?
No. A savings account does not appear on your credit report and does not affect your credit score. The bank will check your identity and may review your banking history, but this is a soft inquiry that does not impact your credit.
What if the child's Social Security number changes?
Contact the bank and provide the new number. The bank will update their records, and the account will continue to function normally. This is rare but can happen if there was an error on the original application or if the child's identity was compromised.