A youth savings account is a bank or credit union account designed for minors, usually opened with a parent or guardian, that teaches money management while keeping balances separate from adult accounts.
These accounts exist because banks need a legal adult on the account—minors cannot sign contracts—but the account itself belongs to the young person. The parent or guardian acts as a custodian, meaning they can deposit money and see the balance, but the account teaches the child to make their own deposit and withdrawal decisions within limits set by the bank or the custodian.
A youth savings account is not a special government program. It is a standard bank product offered by most major banks, credit unions, and online banks. The features vary by institution: some offer no monthly fees for minors, some pay interest on the balance, some include debit cards, and some restrict how often a young person can withdraw money. The account typically converts to a regular adult account once the young person reaches a certain age—usually 18 or 21, depending on the bank.
Key Takeaways
- A parent or guardian must open the account and remain on it as a custodian, but the young person owns the money and makes withdrawal decisions.
- Most youth savings accounts charge no monthly fees and may pay interest, though the interest rate is usually very low.
- Some accounts include a debit card or ATM card for the young person; others require the parent to withdraw cash.
- The account automatically converts to an adult account when the young person reaches the bank's age threshold, usually between 18 and 21.
- A youth savings account builds a banking history and teaches money management, but it does not affect the young person's credit score.
How a youth savings account differs from a regular savings account
A regular adult savings account requires the account holder to be 18 or older and able to sign a contract. A youth savings account bypasses this by putting a custodian—usually a parent—on the account alongside the minor. The custodian has legal responsibility for the account but does not own the money in it.
Youth accounts often have lower or no monthly maintenance fees, whereas adult accounts may charge $5 to $15 per month if the balance falls below a minimum. Some youth accounts also restrict the number of withdrawals per month or require the parent to approve large withdrawals, whereas adult accounts typically allow unlimited transactions. Interest rates on youth savings accounts are usually the same as or slightly lower than adult rates, which are currently very low across most banks—often under 0.01% annually.
Who can open a youth savings account and when
Most banks allow a parent or legal guardian to open a youth savings account for a child as young as newborn, though some set a minimum age of 13 or 16. The parent must bring a government-issued ID and proof of address, and the child usually does not need to be present, though some banks require it. The parent becomes the custodian and retains full legal authority over the account until the child reaches the age of majority in their state—usually 18—or until the account converts to an adult account.
Once the young person is old enough to visit the bank in person, they can begin making deposits and withdrawals themselves. Some banks allow this at any age; others require the young person to be at least 13. If the account includes a debit card, the young person can use it to spend money without the parent's involvement on each transaction, though the parent can still see the balance online.
What happens when a young person turns 18 or 21
Most banks automatically convert a youth savings account to a standard adult account when the young person reaches a set age—commonly 18 or 21. The conversion is usually automatic and requires no action from the account holder. The account number and routing number typically stay the same, so any direct deposits or automatic payments do not need to be updated.
After conversion, the young person becomes the sole owner of the account and the parent's name is removed. The young person can then open additional accounts, explore for a debit card in their own name, and make all decisions about the account without parental involvement. If the parent wants to remain on the account after conversion, they must request it, and the bank will treat it as a joint account rather than a custodial one.
Interest rates and fees on youth savings accounts
Interest rates on youth savings accounts are set by the individual bank and change over time. As of 2024, most traditional banks pay less than 0.01% annual interest on youth savings accounts, meaning a $1,000 balance earns less than $0.10 per year. Online banks and credit unions sometimes offer slightly higher rates—0.01% to 0.05%—but the difference is still minimal for small balances.
Monthly maintenance fees are rare on youth accounts. Most banks waive fees for minors or charge no fee at all. Some accounts require a minimum balance—often $25 to $100—to avoid a fee, but many have no minimum. Overdraft fees, ATM fees, and fees for excessive withdrawals may explore depending on the bank's rules, so it is worth reading the account agreement before opening.
How a youth savings account affects credit and banking history
Opening a youth savings account does not affect the young person's credit score because savings accounts are not reported to credit bureaus. Credit scores are built through borrowing—credit cards, loans, and payment history—not through saving money. A youth savings account is purely a savings tool and does not create a credit history.
However, a youth savings account does create a banking history. When the young person later applies for a credit card, student loan, or other credit product, lenders may ask about their banking history and may look favorably on someone who has maintained a savings account responsibly. The account also gives the young person a record with the bank, which can make it easier to open additional products later, such as a checking account or debit card.
Choosing between a youth savings account and other options
A youth savings account is the most straightforward way for a young person to learn to save money with parental oversight. The alternative is for the parent to keep the money in their own account, which teaches less about independent money management. Another option is a prepaid card, which works like a debit card but is not connected to a bank account and does not build banking history.
Some parents also use a youth savings account alongside a checking account or debit card to separate spending money from savings. This teaches the difference between money meant to be spent and money meant to be saved. The choice depends on what the parent and young person are trying to accomplish: if the goal is to teach saving and banking, a youth savings account is the standard choice. If the goal is straightforward to give a young person a way to spend money, a prepaid card or debit card may be sufficient.
Frequently Asked Questions
Can a young person withdraw money from a youth savings account without the parent's permission?
It depends on the bank and the age of the young person. Some banks allow minors to withdraw money freely once they reach a certain age, usually 13 or 16. Others require the parent to approve withdrawals above a certain amount. Read the account agreement or ask the bank about withdrawal rules before opening the account.
What happens to the account if the custodian dies?
The account belongs to the young person, not the custodian, so it does not become part of the custodian's estate. The young person retains ownership and can continue to use the account. If the young person is very young, a court may appoint a new custodian, or the bank may require a new adult to be added to the account.
Can a young person have more than one youth savings account?
Yes. A young person can open accounts at multiple banks, though each account requires a custodian. Some families open accounts at different banks to teach about comparing interest rates or to separate savings for different goals.
Does a youth savings account require a Social Security number?
Yes. The bank will ask for the young person's Social Security number to open the account and report interest earned to the IRS, even though the interest is usually zero or negligible.