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Should I Open a Savings Account for My Baby?

Lendstart Updated: January 10, 2024 • 5 min read
parents with new born baby

Key Points:

  • Initiating a savings habit early on can lay a solid financial foundation.

  • Having a dedicated savings fund can provide peace of mind and financial security for parents.

  • Before opening a child's savings account, research & compare various financial institutions based on features, interest rates, fees, and customer reviews.

Navigating the world of personal finance can be tricky, especially when considering the future of your little one and possibly opening a savings account for your baby. But we're here to offer you the information you need to help you feel empowered in the decisions you make. Let’s dive into the reasons, the how-tos, and the types available to make an informed choice!

Knowing you have money set aside for your child's needs is a decision you will never regret

Why Open a Savings Account for a Baby?

Initiating a savings habit early on can lay a solid financial foundation. Having a savings account for your baby may allow you to grow funds for future needs, like education. Knowing you have money set aside for whatever your child needs is a decision you will never regret—and also one that offers you incredible peace of mind.

Are you expecting your first child? Congratulations! Here are four steps to help you prepare financially.

Best Savings Accounts for a Newborn Baby


No Monthly Fees or Minimum

No minimum

Min Deposit


ATM Network


Other Fees

Online Banking Savings

No minimum

Min Deposit

Min 2%

Min APY Savings

Online Banking Checking

No minimum

Min Deposit

Pros & Cons

  • con-icon No monthly fees or minimum balance requirement
  • con-icon People can repair their credit history
  • con-icon Access to 60,000+ fee-free ATMs
  • con-icon User-friendly mobile app
  • con-icon No overdraft fee
  • con-icon No physical branches
  • con-icon Daily and weekly maximum limits

Account types

  • Checking
  • Savings
  • Money Market Deposit Account (MMDA)


  • Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.
  • The Annual Percentage Yield ("APY") for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of September 20, 2023. No minimum balance required. Must have $0.01 in savings to earn interest.

Quontic Online Bank Logo
Quontic Banking
  • No monthly/overdraft fees
  • Low minimum deposits
Visit Site
Patriot Bank Logo
Patriot Bank
  • Enjoy a 0.70% APY high-yield
  • Personalized products for your goals
Visit Site
Axos Bank
  • Earn up to 0.61% APY
  • Up to $200 Bonus for High-Yield Savings
Visit Site
Ponce Bank Logo
Ponce Bank
  • MMDA Account with 0.75% APY
  • No m. service fee, no limits on withdrawals
Visit Site
  • Offers automatic savings account
  • No maintenance fees, no foreign transaction fees
Visit Site

How to Open a Savings Account for a Baby

Opening a savings account for a baby might sound complicated. Fortunately, the process can be relatively straightforward, and we’ve broken it down into simple steps to give you an idea of what to expect. 

  1. Research banks and credit unions: Before opening a child’s savings account, it’s beneficial to do some homework. Compare various financial institutions, weighing their features, interest rates, fees, and customer reviews. Each bank and credit union might offer slightly different benefits, so knowing what you want beforehand can guide your decision.
  2. Gather necessary documents: To make the process smoother, ensure you have all the required documents on hand—we’ll outline these documents later in this article.
  3. Choose the account type: Financial needs vary from family to family. Hence, decide what you’re aiming for. Each account type serves different purposes, so aligning it with your goals is crucial.
  4. Visit your chosen bank or credit union: In today’s digital age, many financial institutions offer the convenience of online applications. However, some might still require an in-person visit, especially when opening an account for a minor. If an in-person visit is needed, it could also provide a great opportunity to ask any questions and get a feel for their customer service.
  5. Deposit the initial amount: This is a particularly exciting step! Once the account is set up, kickstart the savings journey by making your first deposit. Depending on the institution, there might be a minimum deposit requirement, so it’s good to be prepared. 

We talk about the best online savings accounts for 2023 here.

Types of Savings Accounts for Newborns

Next, let’s delve into some of the different savings accounts you can choose for your baby. Custodial accounts mean that the parent or custodian has control over the account until it is closed. Here are some of the most common types:


The Uniform Gift to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) are accounts that let guardians or parents save and invest on their children's behalf without establishing a trust, which can be expensive and time-consuming.

With these accounts, contributions are irrevocable, and the money can be used for any purpose, such as:

  • College expenses
  • Medical expenses
  • Vehicles

529 Plans 

Another type of account that could potentially fit your needs is the 529 Plan. This education savings plan allows you to save up funds for future educational costs on behalf of your child, with certain U.S. states allowing the contributed amount to be deducted from your taxable earnings.

Funds are invested in stocks, bonds, and other investments that have the potential to grow over time. The good news is, as long as the money withdrawn from the plan is used for qualified education expenses, you and your child will pay no tax. However, if it isn’t, you will need to pay both federal and state income tax on the withdrawn amount, plus a 10% penalty.

Basic savings account

Basic savings accounts are suitable for short-term saving goals and typically come with lower interest rates. While basic savings accounts are simple to set up and manage, low-interest rates and no tax advantages are significant disadvantages. With that in mind, basic savings accounts may be better as an emergency fund, or to teach your child about money management at a young age.

Requirements for Opening a Savings Account for a Baby

When you’re ready to embark on opening a savings account for your baby, you'll likely need a few key documents.

When you open the account in person, you might be asked to produce:

  • Baby’s birth certificate
  • Baby’s Social Security Number
  • Proof of address
  • Parent or guardian’s ID

What to Look for in a Kids Savings Account

While exploring your options, consider accounts with the following aspects:

  • Opt for accounts with higher yields to maximize growth potential.
  • Look for accounts with no or minimal fees to save money in the long run.
  • Consider features like mobile banking, debit cards, or banking apps that align with your family's convenience needs and financial goals.

What Makes a Good Kids’ Savings Account?

The best accounts align with your family’s financial goals and convenience needs. While weighing your options, you might also consider whether you’d want your child to eventually have access to a debit card or a banking app when they’re older—be sure to look for these features that matter to you. 


Your decision to open a savings account for your baby can provide a head start in their financial journey. It’s an avenue to consider for those looking to secure their child’s future in the realm of personal finance.

Don’t miss this article next to learn more about the best ways to save for your child’s education.

Stay up to date on the latest news and information about savings accounts and other financial news on the Lendstart blog.



Should I open a savings account for my baby?

The decision is personal and depends on your financial goals for your child. However, savings accounts can be an excellent place to start investing in your baby’s future.

Can I open a bank account for my child?

Absolutely! Many banks offer accounts designed for kids and newborns. If you’re looking for an account, ensure the bank offers features that meet your needs and preferences.

What savings account is best for a baby?

Each account type has its own benefits, so consider your long-term goals. For example, a high-yield savings account could be beneficial to maximize growth potential. On the other hand, accounts with fewer fees might be desirable if you want to save money in the long run.

Is it worth opening a bank account for a baby?

Many parents find it beneficial to start saving early for the future—the benefits far outweigh any drawbacks. In fact, there really aren’t any downsides to doing this!

When should I open a savings account for my baby?

It’s never too early! Whether it’s right after birth or a few months later, the choice is yours. But remember, the sooner you open the account, the earlier you can start taking advantage of any growth opportunities.

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