Best Bank for Custodial Savings Account Options

If you're considering opening a custodial savings account for a minor, Ally Bank is worth considering. Ally Bank offers a Custodial Savings Account with no minimum balance requirement and no monthly maintenance fees.

The account also earns interest, with a competitive interest rate of 2.20% APY. This can help your child's savings grow over time.

Ally Bank's online banking platform is user-friendly and allows for easy account management. You can set up automatic transfers, pay bills, and even receive notifications when the account balance falls below a certain threshold.

Ally Bank's reputation for excellent customer service is also a major plus.

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A custodial account is an investment account for children and teens offered by brokers. Adults, usually parents, make contributions to the account on behalf of the child until the child reaches the age of maturity as set by state law.

The custodial account is typically referred to as a Uniform Transfer to Minors Account (UTMA) or a Uniform Gift to Minors Account (UGMA), each managed by its own state program.

The adult who opens the account, known as the custodian, has broad discretion over how the account is invested and managed. The custodian can buy and sell securities, reinvest dividends, and make withdrawals for the minor's benefit.

Once the child reaches the age of maturity, he or she gains control of the account and its assets.

Here are the two main types of custodial accounts:

It's worth noting that custodial accounts can be opened in every state but South Carolina and Vermont for UTMA accounts.

If you're looking for a bank to open a custodial savings account with, there are several options to consider. Alliant Credit Union, Bank of America, and Wells Fargo are just a few of the many banks that offer custodial accounts.

Both brick-and-mortar and online-only banks may offer UGMA or UTMA accounts, though the annual percentage yield (APY) may be substantially higher with an online bank. It's worth noting that a custodial account can hold more than just cash, providing the potential for larger long-term gains than a savings account.

Here are a few banks that offer custodial accounts:

Fidelity is a great option for a custodial account, earning top marks in Bankrate's review of brokers. It offers a full-service broker with exceptional customer service, extensive research resources, and a wide range of investment options.

Fidelity's custodial account provides access to stocks, bonds, mutual funds, ETFs, options, CDs, and fractional shares. This means you can diversify your child's investments and take advantage of various investment opportunities.

With no minimum opening deposit or recurring maintenance fees, Fidelity's custodial account is a low-barrier entry point for starting a child's investment journey. This makes it easy to get started, even with a small amount of money.

Fidelity also offers a Roth IRA for kids and a Youth Account for teens aged 13-17, giving them full control over their investments before they turn 18 with no fees or minimum balance requirements. This is a great way to teach your child about responsible investing and financial management.

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Merrill Edge is a great option for custodial savings, especially for Bank of America customers who can take advantage of its extensive network of physical locations.

No minimum account requirements make it easy to start saving.

$0 commissions for stock and ETF trades make it an attractive option for investors.

Merrill Edge also offers $0.65 options contracts, which is a cost-effective way to trade options.

Dividend reinvestment is available, which can help maximize returns over time.

Fractional share investing isn't available for stock purchases, but it's worth exploring other options like 529 plans for investing in a child's future.

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Acorns is a great option for custodial savings, especially for families with kids. You can open an account with just $5.

The Acorns Early account is available under the Acorns Gold service tier, which costs $12 per month. However, this tier offers multiple children's accounts without additional fees.

Acorns also offers a 1 percent match for parents who contribute to their child's custodial account. This can be a great incentive to start saving for your kids' future.

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One thing to keep in mind is that Acorns' fees can be significant for small balances, cutting into investment returns. But for families who want to make saving and investing easy, Acorns has some great tools.

Here are some key features of Acorns:

Opening a Custodial Share Savings account for a minor is a smart way to help them start saving early. It's the first step to lifelong saving, teaching foundational banking skills, and helping them develop good financial habits.

One of the benefits of a Custodial Share Savings account is that it allows you to teach your child how to save early and watch their money grow over time. This can be a great way to show them the value of saving and how it can help them achieve their long-term goals.

A Custodial Share Savings account can also be a way to help your child learn to plan ahead and stay focused on their goals and priorities. By saving regularly, they'll be able to see their money grow and understand the importance of saving for the future.

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Here are some key features to look for in a Custodial Share Savings account:

By opening a Custodial Share Savings account, you'll be giving your child a head start on their financial journey and teaching them valuable skills that will last a lifetime.

A custodial savings account is more than just a place to stash your child's money - it's a life lesson in good financial habits. By opening a custodial share savings account, you're teaching your child the value of saving and investing for the future.

You can open a custodial account under the Uniform Transfers to Minors Act (UTMA), which allows you to transfer assets to a minor child. This type of account is more flexible than others and can hold any type of property, including real estate and artwork.

The benefits of a custodial account include the potential for larger long-term gains due to the ability to include investments. However, it's worth noting that the assets in a custodial account are owned by the minor, which could impact their eligibility for federal financial aid.

Here are some key features to look for in a custodial account:

A custodial account can be opened at both brick-and-mortar banks and online-only banks, with the latter often offering higher annual percentage yields (APYs). Be sure to ask about account fees and features, such as online tutorials and parental controls, when shopping for a custodial account.

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When choosing a custodial savings account, it's essential to consider account management features.

Some banks and credit unions offer waived monthly fees and minimum-balance requirements for minor children, which can save you money in the long run.

Ask about account perks and features, such as online tutorials, that can help you navigate the account and teach your child good financial habits.

Parental controls can also be a valuable feature, allowing you to set limits and monitor your child's spending activity.

Custodial accounts are a great way to save and invest for a child, but it's essential to understand the key information involved.

Money put into a custodial account is an irrevocable gift to the child the account was established for, and the custodian must ensure it's invested and used for the child's benefit.

The state legislation that allows for gifts to children is the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA).

Custodial accounts can be a convenient way to give financial gifts to a child, and you don't have to set up a trust to do it, which can be costly.

However, keep in mind that UGMA/UTMA brokerage accounts are considered assets owned by the child, which can impact financial aid when applying to college.

Here are the age ranges for transferring control of a custodial account to the child:

Opening a custodial share savings account is a smart way to help kids start saving early, teaching foundational banking skills and the value of lifelong saving.

A custodial account can be a great option for kids, but there's also an alternative: a savings account designed for children under 18 with joint ownership between the parent and child.

Some of the best savings accounts for kids come with perks like apps with educational content, parental controls, and debit cards for teenagers.

These accounts can be a great way to teach kids to plan ahead, prioritize their goals, and understand how their money can grow with compound interest.

When shopping for a savings account for your child, look for one with no maintenance fees, no minimum balance requirement, and a high annual percentage yield (APY).

Some popular banks for kids' accounts include Alliant Credit Union, Bank of America, Bethpage Federal Credit Union, Capital One, Golden 1 Credit Union, USALLIANCE Federal Credit Union, and Wells Fargo.

Here are some benefits of opening a savings account for a child: