Opening a custodial bank account for your child can help you teach them smart money habits, and the best ones are packed with features to help you do just that. You can find custodial checking, savings, and even investment accounts for your minor child based on the institution.
But how do custodial accounts work, and which one is best suited for your child? This article will cover twelve of the best custodial accounts for kids under 18. But first, let’s talk a bit about how custodial accounts for kids work.
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How Do Custodial Accounts for Kids Work?
Custodial banking and investment accounts are opened and managed by an adult on behalf of a child. The custodian doesn’t have to be a parent or other relative, but they must commit to handling the money in the child’s best interest. This commitment is also known as a “fiduciary relationship.”
There are two main types of custodial banking accounts:
UGMA accounts allow minors to own cash assets such as cash, stocks, bonds, and mutual funds. UTMA accounts can hold those investments while including other assets such as real estate.
Make sure you speak with an investment advisor well-versed with custodial accounts to determine which one you should open.
Best Custodial Accounts for Kids
Below is our list of the top custodial accounts for kids. I’ll let you know what we like about each account and list the key features of each one.
1. Ally Bank
What we like: Full-service to cover all of your banking needs
Ally Bank (formerly GMAC Bank) launched in 2000 as an offshoot of GMAC auto finance company).
This online-only bank is an FDIC-insured, full-service financial institution. They can help with any financial needs, from mortgages to auto loans to personal banking and investment accounts.
Here are the types of custodial accounts you’ll find at Ally Bank.
Custodial Online Interest Checking
Ally Bank’s custodial checking account features a debit card that has settings that let you control how, where, and when you use the card. Other features include:
- No minimum balance requirement or opening deposit
- No monthly service fee
- Free ATM withdrawals at over 43,000 Allpoint ATMs
- Free debit card with parental controls
- Interest paid on all balances
- Round-up to savings accounts option
Custodial Online Savings
Ally’s custodial savings account features an optional “Surprise Savings” feature that analyzes money in a linked checking account and transfers it to savings when it senses extra money. Other features include:
- No minimum balance requirement or opening deposit
- No monthly service free
- Free ATM withdrawals at over 43,000 Allpoint ATMs
- Buckets to categorize your savings funds
- Industry-leading interest rates
Custodial Investment Account
Ally’s self-directed and robo-advisor accounts are available as custodial accounts and include many research tools. Other features include:
- No fees for self-directed trades on stocks, ETFs, and options
- $9.95 per no-load mutual fund trades
- $1 per bond trade$4.95 for low-priced securities trades
- $0 opening requirement for self-directed accounts
- $100 opening requirement for robo accounts
- No advisory fees for robo accounts
Ally Bank offers 24/7 customer service by phone or chat. Each account comes with various features so you can tailor your child’s banking needs as desired.
2. Charles Schwab
Charles Schwab is a well-known investment firm that has been in operation since 1971. It is a member of the SIPC.
For minors, Charles Schwab’s investment accounts include a standard investment account, an Educational Savings Account (ESA), and a 529 Savings plan account. Here’s a look at their custodial investment account:
Schwab One Custodial Account
The Schwab One Custodial Account doesn’t have any contribution limits and includes 24/7 customer service. Other features include:
- $0 minimum opening deposit
- $0 monthly maintenance fees
- Zero fees for online-listed stock and ETF commissions
- Options trades for $0.65 per contract
- Broker-assisted trades: $25
- Auto-phone trades: $5
- Online OTC Market trades: $6.95
You can also get Schwab “Slices,” which are slices of stock shares, for as little as $5 each. This way, you can invest for your minor on any budget.
Charles Schwab recommends opening a 529 Savings Plan or an ESA if your main goal in saving for the minor is to fund college expenses.
Learn more about Charles Schwab
3. Vanguard
Vanguard was founded in 1975 by investment great John C. Bogle. Also a member of SIPC, Vanguard is well known for its high-performing mutual funds.
Vanguard UGMA/UTMA
The Vanguard UGMA/UTMA account offers a broad line of investment options with an attractive fee schedule for self-directed investors. Some features include:
- $20 annual management fee (can be waived)
- $3,000 minimum opening deposit
- Free online ETF, mutual fund, and stock trades
- $1 per-contract for online options trades
The $3,000 minimum investment may be a hurdle for some investor custodians. Also, Vanguard does not offer fractional share investing.
While these parameters might take you out of the running for Vanguard when you first start investing, you can always transfer your account from another broker when you reach a balance of $3,000 or more.
Vanguard also offers a 529 College Savings Plan for minors – a Nevada plan – available to families in all 50 states.
4. E*Trade
Beginning in 1982 as TradePlus, the owners branched off with E*Trade in 1991 to become one of the first online investment platforms. Morgan Stanley acquired E*Trade a few years ago and now offers a custodial brokerage account with some attractive features.
E*Trade Custodial Brokerage Account
The E*Trade custodial brokerage account offers benefits such as a free debit card and checking privileges when you open a brokerage account. Other features include:
- No minimum opening deposit amount
- $0 annual fee for online self-directed trading accounts
- $0 stocks, options, and ETFs
- Option contracts are $0.65 per
- Futures contracts are $1.50 per
One downside of E*Trade is that it, like Vanguard, does not offer fractional shares except in the case of dividend reinvestments. E*Trade also offers Coverdell ESAs and custodial IRAs for income-earning minors.
Telephone customer support is available Monday to Friday. E*Trade is on our list of the top stockbrokers that offer free trades.
5. Fidelity
Fidelity is also on our list of best free trade brokers. It was founded in 1946 and is one of the largest asset managers in the world.
Fidelity Custodial Investment Account
Fidelity has an expansive array of online investment tools for investors. You can leverage the tools to help research investments properly and minimize the risk for your custodial account.
Other features include:
- $0 minimum opening deposit
- $0 maintenance fees
- Zero commissions for online stocks, commissions, and ETF trades
Fidelity’s Custodial Investment account is much like other brokers in many ways. It offers free online trading, a 529 Savings Account, and a youth IRA account.
However, many choose Fidelity to take advantage of its non-custodial Youth Account for teens between 13 and 17. The account allows them to spend, save and invest. There are no account fees or minimums, and Fidelity includes parental controls and a free debit card.
Note that you as a parent must have an existing Fidelity account for your teen to open a Youth Account.
6. EarlyBird
EarlyBird is a company that offers custodial investment accounts for children to make it easy for family and friends to gift money to your minor to invest.
The company is a member of SIPC and is an SEC-registered investment advisor. EarlyBird uses Apex Clearing Corporation to process transactions.
Anyone who has your minor child’s EarlyBird link can make deposits. They can even include a personalized video along with the gift.
EarlyBird Investment Account
EarlyBird will tell you the projected value of a gift when the child turns 18. That way, gift-givers can see the potential for the long-term impact of their deposit.
Other features include:
- $0 minimum investment
- $1 monthly service fee ($0 if account balance is under $200)
- $2 fee for gift giving transactions
EarlyBird lets you choose from five different fixed portfolio funds to invest in, from conservative (100% bonds) to aggressive (100% ETFs) and a mix of the two.
EarlyBird bases recommendations on the child’s age, investment goals, time horizon, risk tolerance, etc.
7. Greenlight
Greenlight helps children earn money through chores and then teaches them how to manage that money.
Although Greenlight isn’t a traditional UTMA/UGMA account, it is parent-controlled and lets children spend, save, and invest.
Greenlight
The Greenlight website is ripe with financial literacy tools to help your child learn money management skills with your help. Features include:
- $0 opening balance requirement ($1 for investment account)
- $4.99 per month for up to 5 kids and 2 adults per plan
- $7.98 for Greenlight + Invest, $9.98 for Greenlight Max
- $0 trading fees
- $0 commissions
- No overdraft fees
The basic Greenlight account includes a free debit card for spending, and a chores feature that allows parents to set tasks and pay kids upon completion.
All Greenlight accounts include a free savings account. Greenlight + Invest allows kids to invest in fractional shares of their favorite stocks. Parental controls allow parents to set debit card and investment transactions parameters.
✨ Related: Best Bank Accounts for Kids: Checking and Savings Options
8. Stash
Stash has been around since 2015. The investment fintech accommodates custodial investment accounts with minimal fees and fractional share investing options.
Stash+
Stash has two tiers of investment accounts: Stash Growth and Stash+.
Stash+ is the account you’ll need to open if you want to open custodial investment accounts.
Features include:
- $9 monthly fee for two custodial investment accounts (plus your own)
- No account minimums
- Fractional stock share transactions
- Banking access
- Stash Stock-Back® Card1
You might find the monthly fee is high for your tastes, but keep in mind that the $9 per month includes the option to have three brokerage accounts; one adult account and two custodial accounts.
Note that you can purchase fractional shares of stock for as little as $0.01 and all Stash accounts offer investment advice when needed.
Paid non-client endorsement. See Apple App Store and Google Play reviews. View important disclosures.
Nothing in this material should be construed as an offer, recommendation, or solicitation to buy or sell any security. All investments are subject to risk and may lose value.
1Stash Banking services provided by Stride Bank, N.A., Member FDIC. The Stash Stock-Back® Debit Mastercard® is issued by Stride Bank pursuant to license from Mastercard International. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. Any earned stock rewards will be held in your Stash Invest account. Investment products and services provided by Stash Investments LLC and are Not FDIC Insured, Not Bank Guaranteed, and May Lose Value.
9. Copper
Copper is a fintech that helps kids learn to manage and save their money. When you as a parent open a Copper account, you can add up to five kids’ Copper accounts.
Copper Banking Account
The Copper Banking account includes a free debit card that allows kids to spend when, where, and how the parental controls of the card say they can.
Other features include:
- $0 opening deposit
- $0 minimum balance requirement
- No monthly service fees
- Savings pods to help your child reach savings goals
- Customizable parental controls.
There are no investment features with Copper. Financial education lessons called Cheat Codes give your kids added tools to help them succeed at money management. The Copper app allows you to enable activity notifications and transfers between accounts.
Free cash withdrawals are available at over 55,000 Allpoint ATMs. However, some out-of-network ATM owners might charge a fee.
10. Acorns
Acorns is a micro-investing app that allows you or your custodial child to invest money. The app connects to spending accounts such as bank accounts, debit cards, and credit cards. It rounds up each purchase and puts the cash into an Acorns investment account.
You can also open a spending account directly in your Acorns account.
Acorns Investing
You can fund your Acorns account via Automatic Payroll Deduction or lump sum transfer though will be the primary method of funding the account.
Other features include:
- $5 per month fee to open one adult account and multiple kid accounts
- No minimum balance requirement
- No opening deposit requirement
- Free debit card and free in-network ATM withdrawals
- Bonus investment deposits when you shop using the app
Acorns is a robo-advisor that uses your age, goals, time horizon, and risk tolerance to choose your diversification mix.
The app uses six asset classes to invest in small-cap, large-cap, emerging markets, government bonds, corporate bonds, and real estate. To learn more about the Acorns app, click the link below or check out our full review.
11. Stockpile
Stockpile is a brokerage that allows you to bull, sell and gift fractional shares of stock. The goal of founder Avi Lele when he first started the company was to give stock shares to his nieces and nephews.
Stockpile Custodial Investment Account
Stockpile’s custodial investment account allows you to buy fractional shares of stocks and ETFs for as little as $1. Choose from thousands of popular stocks and ETFs.
Some Stockpile features include:
- $0 trading fees
- No commissions
- Gift cards available
- No minimum balance requirement
You can have relatives and friends gift stock shares to your child’s Stockpile account, but there is a fee for purchasing gift cards. Stockpile’s main benefit is that it lets you buy fractional shares in small amounts with no fees.
12. Firstrade
Firstrade is geared toward serious investors looking to open a custodial investment account. The site has a robust selection of research investment tools.
Use Morningstar reports, watchlists, and more to help analyze and choose your child’s investments.
Firstrade Custodial Brokerage Account
The Firstrade Custodial brokerage account offers benefits such as extended trading hours and equities investments. Other features include:
- $0 fee stock, ETF, and mutual fund trades
- No commissions
- $0 account opening requirement
- No minimum balance requirement
Firstrade offers Coverdell ESAs as well. Open the Firstrade account for your minor child, and have them shadow you as you invest with your Firstrade account.
If you’re a serious investor, Firstrade offers an excellent avenue for helping your minor kids see you in action while getting in on the action with their account.
Final Thoughts on Custodial Accounts
There are many types of custodial accounts you can open for kids under 18. You can choose from spending or checking accounts, savings accounts, brokerage accounts, IRA accounts, and education savings accounts.
The custodial account you choose will depend on which benefits you’re searching for your child and the fees, minimum balances, and other features that best fit your needs.
There’s no need to limit your child to just one custodial account at one institution. Pick and choose custodial accounts based on how they fit the financial goals you have in mind for your child(ren).
And keep fees in mind, as we all know that fees can be vital to how fast (or how slow) your portfolio grows.
