Yes, you can open a bank account for your grandchild at almost any bank or credit union. No federal law limits minor accounts to parents, and most institutions will let a grandparent set one up. What matters more than the “can I” question is which account type you choose, because that decides who legally owns the money, who controls withdrawals, how it is taxed, and when your grandchild gets the keys.
Whether a specific bank will let you — rather than a parent — serve as custodian is a matter of that bank’s own policy. Federal regulators leave the call to each institution and its counsel.1Federal Financial Institutions Examination Council. SR 15-5 Guidance on Youth Savings Programs Most accept grandparents for basic custodial savings. Some restrict the role to legal guardians, especially when the account comes with a debit card or overdraft risk. Call ahead and ask whether a parent’s signature will also be required.
The Four Account Types to Choose From
Custodial Accounts (UTMA and UGMA)
Custodial accounts under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act are the most common structure. Every state, the District of Columbia, and the U.S. Virgin Islands has adopted some version of the UTMA. Your grandchild legally owns the money the moment it goes in; you manage it as custodian until they reach the age set by state law.
Every deposit is an irrevocable gift. You cannot take the money back or redirect it to another grandchild. You also take on a fiduciary duty to spend the funds only for the child’s benefit, and misusing them can expose you to personal liability. Custodial accounts can hold cash, stocks, bonds, and, under the UTMA, other property.
Joint Savings Accounts
A joint account gives you and your grandchild shared ownership. Either owner can generally deposit or withdraw. It is simpler than a custodial account because no separate custodial statute governs it, but the money is not walled off exclusively for the child, and you remain responsible for reporting interest on your taxes. This structure can be useful when you want your grandchild to have hands-on access as they grow older.
529 Education Savings Plans
A 529 is a tax-advantaged investment account for education. You own and control it, not the child. You can change the beneficiary to another qualifying family member, and your grandchild never automatically takes over at a set age. Earnings grow tax-deferred, and withdrawals for qualifying education costs — tuition, room and board, books, and up to $10,000 per year of K–12 expenses — are free of federal tax.
If your grandchild does not use all of the funds for school, unused balances can be rolled into a Roth IRA in the beneficiary’s name starting in 2024, subject to a $35,000 lifetime cap, annual Roth contribution limits, and a requirement that the 529 has been open for at least 15 years.2Internal Revenue Service. Publication 590-A, Contributions to Individual Retirement Arrangements
Payable on Death Accounts
A Payable on Death (POD) account, sometimes called a Totten trust, is your account during your lifetime. You keep full control of deposits and withdrawals, and your grandchild is named as beneficiary. When you die, the balance passes directly to them outside probate. This is the right structure if the goal is leaving money at death rather than building savings the child can use sooner.
What You Need to Bring
Banks verify the identity of the adult opening the account. Expect to provide your name, date of birth, address, and Social Security number, and to show a government-issued photo ID such as a driver’s license or passport.3eCFR. 31 CFR Part 1020 – Rules for Banks4Office of the Comptroller of the Currency. What Type(s) of ID Do I Need to Open a Bank Account?
For your grandchild, bring their full legal name, date of birth, and a taxpayer identification number, usually a Social Security number. The bank uses that number to issue a Form 1099-INT for any interest the account earns.5Internal Revenue Service. Form 1099-INT Newborns who do not yet have a Social Security number can sometimes be enrolled using an Individual Taxpayer Identification Number, and some banks accept a passport or other government-issued ID number.6Consumer Financial Protection Bureau. Can I Get a Checking Account Without a Social Security Number? Double-check every name and number against the underlying documents; a mismatched Social Security number can hold up the account opening and cause IRS reporting problems later.
How the Opening Works
Most banks let you open the account online or at a branch. Either way, the bank will present a terms-and-conditions disclosure covering fees, interest, and your obligations. That disclosure is the binding agreement, so read it before signing. After you sign, you make an initial deposit. Many children’s savings accounts have low or no minimum, though the amount varies.
Your Duties Once the Account Is Open
If you open a UTMA or UGMA custodial account, every dollar you spend from it must benefit your grandchild. Acceptable uses generally include education, healthcare, and other expenses that directly support the child. You cannot dip into the funds for your own costs, even temporarily, without risking personal liability.
Federal regulators have said minors on custodial accounts should not be given ATM or debit cards, because the custodian is meant to approve every withdrawal.7Office of the Comptroller of the Currency. Guidance to Encourage Financial Institutions’ Youth Savings Programs If you want your grandchild to practice using their own card, a joint account fits that goal better than a custodial one.
When Your Grandchild Takes Over
This is the point that surprises most grandparents who choose a custodial account. Your role ends when your grandchild reaches the transfer age set by state law. In most states that is 21. Some set it at 18, and several let the person who opened the account pick a later age, often up to 25. On that date the full balance transfers into your grandchild’s sole name, and they can spend it however they want. No one can attach conditions after the fact.
A 529 works differently. You keep control regardless of your grandchild’s age. If you are worried about a young adult spending a large balance unwisely, a 529 or a formal trust gives you more control than a UTMA or UGMA.
Name a Backup Custodian
A custodial account can run for two decades or more, so plan for what happens if you cannot manage it. Under most state versions of the UTMA, you can designate a successor custodian by signing a written designation in front of a witness, and it takes effect only if you resign, die, or become incapacitated. Skip this step and the process gets messier: depending on the state, the child’s guardian may take over automatically, or a court may need to appoint someone.
Taxes You Should Know About
Deposits into a custodial or joint account are gifts for federal tax purposes. In 2026, you can give up to $19,000 per grandchild without filing a gift tax return, and a married couple can give up to $38,000 per grandchild by splitting the gift.8Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Contributions above those amounts count against your lifetime gift and estate tax exemption but rarely produce an actual tax bill.
Interest, dividends, and other earnings inside a custodial account belong to the child for tax purposes. For 2026, the first $1,350 of a child’s unearned income is tax-free, the next $1,350 is taxed at the child’s rate, and anything above $2,700 is taxed at the parent’s rate under the “kiddie tax.”9Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax) A plain savings account earning modest interest rarely hits those thresholds; the kiddie tax becomes a real factor when the account holds investments with higher returns.
The 529 is on a separate track. Earnings grow tax-deferred, qualified education withdrawals are federal-tax-free, and many states add a deduction or credit for contributions.
How the Account Affects Financial Aid
The account type also changes your grandchild’s college aid picture. On the FAFSA, UTMA and UGMA balances are treated as the student’s own asset regardless of who opened them.10Federal Student Aid. Current Net Worth of Investments, Including Real Estate Student assets can reduce aid by up to 20 percent of the balance, so a $10,000 custodial account could cost about $2,000 of aid a year.
A grandparent-owned 529 is treated more favorably. Under the current FAFSA it is reported as a parent asset when the student reports parent information, assessed at up to about 5.6 percent, and distributions no longer count as student income.11Federal Student Aid. Free Application for Federal Student Aid (FAFSA) 2026-27 If financial aid eligibility is a priority, a 529 usually beats a custodial account.
FDIC Coverage
Money in a custodial account is insured by the FDIC as a single account belonging to the minor, separate from anything you hold in your own name, up to $250,000 per bank.12Federal Deposit Insurance Corporation. Your Insured Deposits Joint and POD accounts fall under different ownership categories, each with its own $250,000 limit, so spreading balances across account types or across banks stretches coverage further.