How to open a savings account for a baby or child
By Yuliya Goldshteyn, Bankrate.com
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.