What a kids' bank account is
A kids' bank account is a savings or checking account opened in a child's name, usually with a parent or guardian as a co-owner or custodian. The bank holds the money in trust for the minor until they reach the age of majority — typically 18 or 21, depending on your state and the bank's rules. Until then, the parent controls the account: they can deposit money, withdraw it, and make decisions about how it's used.
The account itself works like any other bank account. Money earns interest (though usually very little), you can make deposits and withdrawals, and the account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The main difference is that the child's name is on the account, which means the money belongs to them legally — not to the parent — even though the parent manages it.
Key Takeaways
- A kids' account is held in the child's name with a parent as custodian, and the money belongs to the child even though the parent controls it.
- Most banks require the parent to be present in person to open the account, and some have age limits for when a child can have their own debit card.
- The account earns little to no interest, but it teaches spending and saving habits and keeps money separate from parental accounts.
- When the child turns 18 or 21, the account converts to a standard adult account and the parent's control ends automatically.
- Money in a kids' account may affect financial aid calculations for college, so check with your school's financial aid office if that applies to you.
How to open a kids' account at a bank
Most banks require you to visit a branch in person to open a kids' account. You'll need to bring the child (or at least their Social Security number), a government-issued ID for yourself, and proof of address. Some banks have a minimum opening deposit, usually between $25 and $100, though many waive this for kids' accounts.
The bank will ask you to choose between a custodial account and a joint account. A custodial account is owned by the child, with you as custodian — you manage it but the money is legally theirs. A joint account is owned by both of you equally, which means the money is partly yours and partly theirs. Custodial accounts are more common for kids because they're clearer about ownership and can be better for teaching financial responsibility.
Once the account is open, you can usually manage it online or through the bank's app. Many banks offer a debit card for kids, though some don't issue one until age 13 or older. Check with your specific bank about their age requirements and whether they charge a monthly fee — some kids' accounts are free, others charge $5 to $10 per month.
What happens when your child turns 18 or older
When your child reaches the age of majority in your state — 18 in most places, 21 in a few — the custodial account automatically converts to a standard adult account. Your name comes off the account, and your child now has full control. The bank will usually notify you both before this happens and may ask your child to confirm their contact information.
This is a good time to have a conversation with your child about how to manage the account going forward. If they've been using a debit card, it will continue to work. If they want to set up online banking, change their PIN, or add overdraft protection, they can do that themselves once they're the sole account holder.
How kids' accounts affect college financial aid
If you're planning to file the Free process for Federal Student Aid (FAFSA), money in a kids' account counts as the child's asset, not the parent's. This matters because the FAFSA formula expects students to contribute a larger percentage of their assets toward college costs than parents do — roughly 20% of student assets versus 5.64% of parent assets, though these percentages can vary.
This doesn't mean you shouldn't save for your child's education. It means that if your child has a large balance in their own account when you file the FAFSA, it may reduce the amount of need-based financial aid they're offered. If financial aid is important to your family, talk to your school's financial aid office about how much in student savings will affect your aid package.
Interest rates and fees on kids' accounts
Most kids' savings accounts earn between 0.01% and 0.05% annual interest, which is very little. A $1,000 balance might earn $0.10 to $0.50 per year. Some online banks offer higher rates — occasionally 4% or more — but these change frequently and are not may provide. The point of a kids' account is usually not to build wealth through interest, but to teach saving habits and keep money separate from the parent's accounts.
Fees vary by bank. Many offer free kids' accounts with no monthly maintenance charge. Others charge $5 to $10 per month, though they often waive the fee if you maintain a minimum balance or set up direct deposit. Some banks charge a fee if the account goes negative (overdraft fee), while others decline the transaction instead. Read the fee schedule before you open the account so you know what to expect.
Custodial accounts versus joint accounts
The difference between these two comes down to ownership and control. In a custodial account, the child owns the money and the parent is the custodian — you manage it on their behalf, but it's legally theirs. When they turn 18 or 21, the account becomes theirs completely and you have no further access or say in how it's used. In a joint account, both you and the child own the money equally, which means you both have full access and control at any time.
Custodial accounts are generally better for teaching financial responsibility because the child knows the money is theirs and they're building toward independence. Joint accounts are simpler if you need to manage the account for a child with special needs or if you want to keep emergency access to the funds. Ask your bank which option they recommend for your situation — not all banks offer both.
Frequently Asked Questions
Can a child open a bank account without a parent?
No. Banks require a parent or legal guardian to open an account for a minor. Once the child turns 18, they can open their own account without a parent's permission. Some banks allow teens age 13 and up to open accounts online with parental consent, but an adult must still be involved in the process.
What if I want to move the account to a different bank?
You can close the account at one bank and open a new one at another. The process is the same as opening any account transfer — you'll need the child's Social Security number, your ID, and proof of address. The new bank will issue a new debit card and account number. If the child has automatic payments or direct deposits set up, you'll need to update those with the new account information.
Does my child need a Social Security number to open an account?
Yes. Banks use the Social Security number to report interest earned and to comply with federal tax law. If your child doesn't have one yet, you can request one from the Social Security Administration before opening the account.
Can I withdraw money from my child's account without asking them?
Yes, as the custodian you have legal access to the account and can withdraw money. However, it's good practice to talk to your child about why you're withdrawing it — especially if they're old enough to understand — because the money is legally theirs, not yours. This teaches them about financial boundaries and builds trust.
What happens to the account if the child passes away?
The money in the account becomes part of the child's estate and is handled according to your will or your state's inheritance laws. The bank will freeze the account once they're notified of the death and will require legal documentation (a death certificate and sometimes a court order) before releasing the funds. Talk to an estate attorney about how to handle this if you're concerned.