You can open a savings account for a baby using a parent or guardian's Social Security number and the baby's tax ID

Most banks let you open a savings account in your baby's name before they have a Social Security number. You'll use your own Social Security number to set up the account, then add your baby's number later once you receive it from the Social Security Administration. Some banks require the account holder (you) to be at least 18 years old and have a valid ID; a few require you to be a customer already.

The account itself belongs to your baby legally, which means the money is theirs—not yours. This matters for taxes and for financial aid later. You control the account while they're a minor, but the funds are held in their name. When they turn 18 or 21 (depending on your state and the bank), they typically gain full control.

You don't need to wait for a Social Security number to open the account, but you will need to provide one within a set timeframe—usually 30 to 90 days—or the bank may freeze or close it. If your baby hasn't been assigned a number yet, you can request one from the Social Security Administration before opening the account, or open the account first and update it once the number arrives.

Key Takeaways

  • You can open a savings account for your baby using your Social Security number as the account holder, then add your baby's Social Security number once they receive it.
  • The money in the account belongs to your baby for tax purposes, which affects how interest is reported and may impact financial aid later.
  • Most banks require you to be at least 18, have a valid ID, and sometimes be an existing customer, but no minimum deposit is required at many institutions.
  • Your baby gains control of the account when they reach the age of majority in your state, typically 18 or 21, so plan ahead if you want to manage it longer.

What documents and information you'll need to bring

Bring your own government-issued ID (driver's license, passport, or state ID) and your Social Security number. You'll also need your baby's full legal name and date of birth. If you have your baby's Social Security number already, bring that; if not, bring documentation showing you've applied for one, such as the receipt from the Social Security Administration office.

Some banks ask for proof of address—a recent utility bill, lease, or mortgage statement in your name. A few may ask for your baby's birth certificate, though this is less common. Call the bank before you go in to confirm what they need; policies vary by institution and sometimes by branch.

How interest and taxes work on a baby's savings account

Interest earned in your baby's account is taxed as your baby's income, not yours. This is one reason parents open accounts in their baby's name rather than keeping the money in their own account. For 2024, the first $1,300 of unearned income (interest, dividends) is tax-free for a dependent child; income above that is taxed at the child's rate, which is usually lower than the parent's rate.

The bank will send you a 1099-INT form at the end of the year if the account earned more than $10 in interest. You'll report this on your baby's tax return if one is required. If your baby has no other income and the interest is below the threshold, you may not need to file a return, but check with a tax professional about your specific situation.

Interest rates on baby savings accounts are typically very low—often 0.01% to 0.05% at traditional banks. High-yield savings accounts for minors may offer 4% to 5%, though these are less common and may have higher minimum balances or require the parent to be an existing customer.

Choosing between a regular savings account and a custodial account

A regular savings account in your baby's name is what most parents open. You control it as the parent, and your baby gains control when they reach the age of majority. It's straightforward and works well for most families.

A custodial account (also called an UTMA or UGMA account, depending on your state) is a legal arrangement where you act as custodian of money or investments held for your child. Custodial accounts are more common when you're saving larger amounts or investing in stocks and bonds, not just keeping money in a savings account. The rules are stricter: the money must go to your child when they reach the age of majority (usually 18 or 21), and you cannot use it for regular parenting expenses like food or school tuition.

For most families saving small amounts in a regular savings account, a custodial account adds unnecessary complexity. A regular savings account is simpler and gives you more flexibility. Consider a custodial account only if you're setting aside a significant amount and want the legal structure that comes with it.

Banks and credit unions that offer accounts for minors

Most major banks offer savings accounts for minors, including Bank of America, Chase, Wells Fargo, and Citibank. Credit unions often have lower fees and sometimes higher interest rates; you can search for credit unions in your area through the CO-OP Network or Allpoint.

Online banks like Marcus by Goldman Sachs, Ally, and American Express have offered high-yield savings accounts for minors in the past, though availability changes. Call or check their website to confirm they currently offer accounts for children and what the current interest rate is.

Some banks require a parent to be an existing customer before opening an account for a minor. Others have no minimum deposit, while some require $25 to $100 to open. A few charge monthly maintenance fees ($5 to $15) unless you maintain a minimum balance or set up direct deposit. Compare a few options in your area before deciding; the difference in fees and interest rates can add up over time.

What happens when your child turns 18 or 21

When your child reaches the age of majority in your state (18 in most states, 21 in a few), the account automatically transfers to their control. You will no longer be able to make deposits or withdrawals without their permission. The bank will notify you and your child before this happens, usually a few months in advance.

If you want to continue managing the account after they turn 18, you'll need their permission and signature. Some parents and young adults set up a joint account instead, where both can access the money. Others keep the account separate and the young adult takes over completely.

This is a good time to talk with your child about the money, how it was saved, and what they plan to do with it. Some families use it as a teaching moment about saving and financial responsibility.

How a baby's savings account affects financial aid later

Money in your child's name is counted as their asset when they explore for federal student aid (FAFSA). Assets in the student's name reduce aid may be able to access more heavily than assets in the parent's name. For every dollar in the student's account, roughly 20 cents is expected to go toward education costs; for every dollar in the parent's account, roughly 5 cents is expected.

This doesn't mean you shouldn't save for your child—saving is still better than not saving. But it's worth knowing that a large balance in your child's name at age 17 or 18 may reduce the amount of need-based aid they receive. Some families use this information to decide whether to keep savings in the parent's name instead, or to spend down the child's account before submitting the FAFSA.

If you're saving a substantial amount and financial aid is a concern, talk with a financial advisor about the trade-offs. For most families saving modest amounts, the impact is small.

Frequently Asked Questions

Can I open a savings account for my baby if I don't have a Social Security number?

Most banks require the account holder (you) to have a Social Security number or ITIN (Individual Taxpayer Identification Number). If you have an ITIN, call ahead to confirm the bank will accept it. Some banks may not, so you may need to try a credit union or a different institution.

What if my baby's Social Security number is delayed?

You can open the account without it and add the number later, usually within 30 to 90 days. If you miss the important date, the bank may freeze or close the account. Request your baby's Social Security number as soon as possible after birth; you can do this at the hospital or at your local Social Security office.

Can I withdraw money from my baby's account to pay for their expenses?

Legally, the money belongs to your baby, so withdrawing it for your own use is not permitted. You can withdraw it to pay for your baby's direct expenses (medical bills, childcare, education), but not for household expenses that benefit the whole family. The rules are stricter if you opened a custodial account.

Should I open the account at the same bank where I have my own account?

It's convenient if you do, but not required. Compare interest rates and fees across a few banks or credit unions first. Sometimes a different institution offers a much better rate, which adds up over years of saving.

What happens if I want to close the account before my child turns 18?

You can close it anytime and withdraw the money, since you control it while your child is a minor. The money is still your child's legally, so consider whether closing it aligns with your savings goals. There are no legal barriers to closing it, though some banks may charge a small fee.