How to Open a Savings Account Under 18

Establishing a savings account for an individual under the age of 18 can be a foundational step in fostering financial understanding. This process allows young people to begin learning about money management, the importance of saving, and how financial institutions operate. By providing a secure environment for funds, a savings account can help a minor understand principles of personal finance from an early age.

Types of Savings Accounts for Minors

When considering a savings account for a minor, two common structures are generally available: joint accounts and custodial accounts. Joint savings accounts typically involve an adult, often a parent or guardian, as a co-owner with the minor. The adult retains full access and control over the funds, which are generally considered the property of both the adult and the minor.

Custodial accounts, established under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA), operate differently. In these accounts, an adult acts as a custodian, managing the funds for the exclusive benefit of the minor. The assets within a custodial account are irrevocably owned by the minor, meaning they cannot be reclaimed by the adult once deposited. The custodian maintains control until the minor reaches the age of majority, which typically ranges from 18 to 21 years old, depending on state provisions.

Custodial accounts have specific tax considerations. Investment earnings, such as interest or dividends, are generally taxed at the minor’s lower tax rate, though limits apply. Contributions to these accounts are considered gifts and are subject to annual gift tax exclusion limits.

Required Information and Documentation

Opening a savings account for a minor necessitates specific information and documentation for both the minor and the accompanying adult. For the minor, financial institutions typically require their full legal name, date of birth, and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). A birth certificate is often requested to verify the minor’s age and establish the relationship with the adult. Proof of the minor’s address may also be needed.

The adult opening the account on behalf of the minor must also provide specific identifying documents. This typically includes a valid government-issued photo identification, such as a driver’s license, state ID card, or passport. The adult’s Social Security Number and proof of their current residential address, like a utility bill or bank statement, are also standard requirements. Documentation confirming the legal relationship between the adult and the minor, such as a birth certificate or guardianship papers, may be requested.

These document requirements comply with federal regulations. Financial institutions verify customer identities to prevent financial crimes. The collected information helps institutions confirm the identity of each individual opening an account.

Steps to Open a Savings Account

The first step involves selecting a financial institution, such as a bank or credit union. Consider factors like interest rates, fees, and online banking services. Confirm the institution is federally insured, protecting deposits. Deposits at banks are insured by the Federal Deposit Insurance Corporation (FDIC), and those at credit unions by the National Credit Union Administration (NCUA).

Many financial institutions require an in-person visit to open a savings account for a minor, particularly for individuals under a certain age. Both the minor and the accompanying adult may need to be present at the branch to complete the application. During this visit, the pre-collected documents will be submitted for verification by a bank representative.

Alternatively, some institutions may offer online application options, especially for older minors, where documents can be uploaded digitally. After submitting the application and required documentation, an initial deposit will typically be required to activate the account. This minimum deposit amount can vary among institutions. Once the account is established, the minor can begin using it to save money and learn about financial responsibility.