How To Open A Savings Account For A Baby or Child

MoMo Productions/Getty Images

Opening a savings account for your child can provide a safe place for their money and allow the funds to earn some interest — all while teaching them about banking and money management.

When setting up an account for a child, parents or guardians can choose between a custodial account or a savings account designed for kids. Many financial institutions offer both options.

How to open a savings account for a child

Opening a savings account for a child is very similar to opening one for an adult. Here are the steps to take to open a savings account for a baby or child.  

1. Choose your account

There are two types of savings accounts you can open for a kid: a custodial account and a kid’s savings account. 

• A custodial account is an account that adults can set up and manage on a minor child’s behalf until the child is a legal adult. These can be standard savings accounts, certificates of deposit (CDs), or certain investment accounts that allow you to hold assets other than cash (called uniform transfer to minors accounts (UTMA) or uniform gift to minors accounts (UGMA).
• A kid’s savings account is usually opened as a joint savings account where both the parent or guardian and the minor child are the owners. These accounts often come with features like parental controls, educational tools and features for learning about money. 

You can find both types of accounts at banks and credit unions, though not all financial institutions offer them. For UTMAs and UGMAs, you can also look at brokerages. 

Two of the most important things to look for in a savings account for a kid are high yields and low (or no) fees. Before you choose, ask about account special features, such as parental controls.

Here are a few banks and credit unions that offer custodial savings or kid’s savings accounts to get your started:

• Alliant Credit Union
• Ally Bank
• Bank of America
• Bethpage Federal Credit Union
• Capital One
• Golden 1 Credit Union
• USALLIANCE Federal Credit Union
• Wells Fargo

2. Prepare the required documents and information

To open a savings account for your child, you typically need to provide contact details and information verifying your identities.

Adults should be prepared to share contact information such as:

• Email
• Phone number
• Home address, including proof of address (such as an electricity bill)

You’ll also need to provide proof of ID. These documents may include:

• Social Security number (both the adult and the minor)
• Student/school ID card (for the minor)
• Birth certificate (for the minor) 
• Driver’s license
• Passport
• Military ID

Check with your bank or credit union to see which documents they’ll take as proof of identity.

3. Make your initial deposit

While some banks don’t require a minimum deposit to open an account, others may require something like $25 or more. Either way, you’ll want to fund your account quickly to avoid early account closures and also so you can start earning interest! 

You can likely fund your account with a transfer from another bank account the parent/guardian owns, with a check via mobile check deposit, or by bringing in cash or a check to a branch.

4. Set up online banking credentials

Whether you opened up your account online or at a physical branch, you’ll want to set up an online banking log-in so you or the child can sign on to the bank’s website or app to manage the account. 

Consider a separate savings account for college

There are a variety of accounts that help you build up savings for the daunting expense of college. You just have to decide which one works best for your family’s goals and circumstances. Two accounts you can choose from include:

• 529 account, which allows you to invest after-tax money and then withdraw the money tax-free for qualified education expenses.
• Education Savings Account (ESA): Also known as “Coverdell ESAs,” these accounts get no special tax treatment from the states, but federal taxes are deferred. The IRS doesn’t tax withdrawals as long as they are used for qualifying education expenses and ESAs have little impact on eligibility for financial aid.

Children’s savings accounts FAQs

Bottom line

It’s never too soon to get your child started on a savings path and a kid-friendly savings account can go a long way toward establishing good money-saving habits.

They’re not only a safe place to keep money and earn a little interest, but they’re also a proven way to help teach your child about money management and saving toward financial goals.