What you need to open an account and who can do it

You can open a savings account for your grandchild at most banks and credit unions, but the account structure depends on the child's age. If your grandchild is under 18, the account must be a custodial account — a legal arrangement where you or another adult holds the account in the child's name and manage it until they reach the age of majority (18 or 21, depending on your state).

You do not need to be the legal guardian to open a custodial account. Grandparents, aunts, uncles, or any trusted adult can set one up. The financial institution will ask you to name yourself as the custodian and provide the child's Social Security number or Individual Taxpayer Identification Number (ITIN).

If your grandchild is 18 or older, they can open their own account with you present, or you can help them do it remotely depending on the bank's rules. Some institutions allow minors as young as 13 to open accounts with parental or guardian consent, though the rules vary by bank.

Key Takeaways

  • A custodial account in your grandchild's name lets you deposit money and manage it until they turn 18 or 21, at which point the account becomes theirs to control.
  • You will need the child's Social Security number, proof of your identity, and your address to open the account — you do not need to be the legal guardian.
  • Different banks have different minimum balances, fees, and interest rates, so comparing a few options before opening saves money over time.
  • Money in a custodial account belongs to the child legally, which affects financial aid calculations if they later attend college.

Documents and information you will need

Bring or provide your grandchild's Social Security number — this is the main identifier the bank uses. If your grandchild does not have one, you can request one from the Social Security Administration before opening the account, though some banks will help you explore during the account setup.

You will also need a government-issued photo ID for yourself (driver's license, passport, or state ID card) and proof of your current address, usually a recent utility bill, lease, or mortgage statement. Some banks accept a driver's license as both ID and address proof.

The bank will ask for the child's full legal name and date of birth. If you are opening the account in person, bring the child with you — many banks require the minor to be present, though some allow you to open it without them if you have the necessary information.

Where to open the account: banks versus credit unions

Traditional banks like Chase, Bank of America, and Wells Fargo all offer custodial savings accounts, usually with no minimum balance requirement for children's accounts. Interest rates at large banks are typically very low — often under 0.01% — but the accounts are straightforward and widely available.

Credit unions often pay higher interest rates on savings accounts and may have lower or no monthly fees. You do not need to work for a specific employer or live in a specific area to join many credit unions anymore — some are open to anyone. Search for credit unions in your area or check if you already belong to one through your job or family membership.

Online banks like Marcus, Ally, and Discover often offer the highest interest rates for savings accounts, sometimes 4% to 5% depending on the current market. The trade-off is that you cannot walk into a physical branch, though most offer phone and chat support. Opening an account online typically takes 10 to 15 minutes.

Compare at least two or three options before deciding. A difference of even 1% in interest rate means real money over years — on $1,000, the difference between 0.01% and 4% is roughly $40 per year.

The step-by-step process

In person at a bank or credit union: Visit a branch with your ID, proof of address, and your grandchild's Social Security number. Tell the representative you want to open a custodial savings account. They will fill out the paperwork, which typically includes a signature card and a form naming you as custodian. The account usually opens the same day, and you can deposit money when ready.

Online: Go to the bank's website and look for "open an account" or "custodial account." You will enter your information, your grandchild's name and Social Security number, and answer questions about the account type. The bank will ask you to verify your identity, usually by uploading a photo of your ID or answering security questions. Once approved (usually within a few hours to one business day), you can log in and make your first deposit by transferring money from another account or setting up a direct deposit.

By mail: Some smaller banks and credit unions still allow you to request an account process by mail. This is slower — expect 2 to 3 weeks — but may be an option if you prefer not to visit in person or explore online.

What happens to the money when your grandchild turns 18

When your grandchild reaches the age of majority in your state (18 in most states, 21 in a few), the custodial account automatically converts to a regular account in their name. You lose the legal right to manage it, and they gain full control — they can withdraw all the money, close the account, or keep it open.

Some banks send a notice a few months before this happens so you can discuss it with your grandchild. Others do not, so mark your calendar. If you want to transfer the money to a different account or investment before the transition, you have time to do that while you still have control.

This is a good moment to have a conversation with your grandchild about saving and money management. If they have been watching the account grow, they may be more likely to keep saving rather than spend it all at once.

Tax and financial aid considerations

Money in a custodial account is legally the child's money, not yours. This has two important consequences: first, if your grandchild earns interest on the account, they may owe taxes on it (though the amount is usually small). Second, if they later explore for college financial aid, the account will be counted as their asset, which can reduce the amount of aid they receive.

The tax impact is minimal for most savings accounts. In 2024, a child can earn up to a certain amount of interest tax-free (the exact threshold changes yearly), and anything above that is taxed at their rate, which is usually lower than yours. Your grandchild's parents or guardians should report any interest earned on their tax return.

If college financial aid is a concern, talk to your grandchild's parents about whether a custodial account is the best choice. Some families use other savings vehicles like 529 plans (education savings accounts) or accounts in the parents' names instead, because they are treated differently in financial aid calculations. A financial advisor or your tax preparer can explain the trade-offs for your specific situation.

Frequently Asked Questions

Can I add money to the account whenever I want?

Yes. Once the account is open, you can deposit money by transferring it from another account, setting up automatic transfers, or depositing cash or checks in person at a branch. There are no limits on how much you can deposit into a custodial account, though the bank may have daily or monthly transfer limits depending on the account type.

What if my grandchild's parents disagree with me opening the account?

The legal parents or guardians have authority over the child's finances and can object. If there is family conflict, it is better to talk to them first. If you open an account without their knowledge and they object, they may be able to have it closed or transferred to their control, depending on your state's laws and the bank's policies.

Can my grandchild withdraw money from the account before they turn 18?

Not without your permission. As the custodian, you control withdrawals until they reach the age of majority. Some grandparents let the child make small withdrawals to learn about money management, while others keep the account locked until the child is older. You decide how it works.

What if I pass away before my grandchild turns 18?

The account does not close, but the bank will need to know about your death. The account will be transferred to the child's legal guardian or parents, who become the new custodian. Tell your family where the account is and provide them with the account number so they can manage it if something happens to you.

Is there a minimum amount I have to deposit to open the account?

Most banks have no minimum for children's savings accounts, though some credit unions or online banks may require $25 to $100 to open. Check the specific bank's requirements before you start the process. Even if there is a minimum, it is usually small enough that it is not a barrier.