You can open a certificate of deposit for your child at most banks and credit unions, either as a custodial account under your state’s UTMA or UGMA law or as a joint account with the child listed as co-owner. You’ll need your own government-issued photo ID and your child’s Social Security number, along with any additional documents the bank requests. The structure you choose determines who legally owns the money, how the interest is taxed, and when your child gains full control.
Custodial or Joint: Pick the Structure First
The two common ways to hold a CD for a minor work very differently, and the choice is harder to undo than to make.
A custodial account is opened under the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA). Nearly every state has adopted one or both. The account is titled in your child’s name, and you serve as custodian. Your child is the legal owner of the funds from the moment of deposit, and the transfer is irrevocable. You cannot take the money back, and you cannot use it for your own expenses or for basic parental obligations like food, clothing, or housing. Spending has to directly benefit the child, such as education or medical costs.
A joint CD lists you and your child as co-owners with equal rights to the funds. Because the money isn’t irrevocably gifted, you keep more flexibility over deposits and withdrawals. The trade-off is that a joint CD does not create the same legal separation of assets as a custodial account, and either owner can access the funds.
What to Bring to Open the Account
Federal anti-money-laundering rules require banks to collect a name, date of birth, address, and taxpayer identification number for every customer before opening an account.1eCFR. 31 CFR 1020.220 – Customer Identification Program In practice, that means:
- Your child’s Social Security number and basic identifying details.
- Your unexpired government-issued photo ID, such as a driver’s license or passport.
Individual banks often ask for more, such as a certified birth certificate for your child or proof of your residential address. Call ahead or check the bank’s website so you’re not making a second trip.
The Steps to Open and Fund the CD
- Compare CDs. Look at the term, interest rate, and minimum deposit. Opening deposits commonly run from $500 to $2,500, though some institutions offer CDs with no minimum.
- Complete the application. You can usually apply online or at a branch. Your child’s name and Social Security number go in the primary account holder fields; your information goes in the custodian or joint owner section.
- Fund the deposit. Transfer from a linked bank account or bring a cashier’s check. The term begins once the deposit clears.
- Keep the paperwork. The bank issues a confirmation showing the rate, maturity date, and account number, and most make it available through online banking.
How the Interest Gets Taxed
Interest on your child’s CD is unearned income, and it falls under the “kiddie tax” rules in the Internal Revenue Code.2Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed These rules apply to children under 18, and to some full-time students under 24 whose earned income doesn’t cover more than half their own support.3Internal Revenue Service. Topic No. 553, Tax on a Childs Investment and Other Unearned Income
For 2026, the first $1,350 of the child’s unearned income is covered by the standard deduction, the next $1,350 is taxed at the child’s own rate, and anything above $2,700 is taxed at your marginal rate.4Internal Revenue Service. Revenue Procedure 2025-32 Most children with only CD interest will stay well within the first two tiers. Once the interest reaches $10 in a year, the bank issues a Form 1099-INT under the child’s Social Security number.5Internal Revenue Service. About Form 1099-INT, Interest Income
If your child’s only income is interest and dividends and the total is under $13,500 for 2026, you can report it on your own return with Form 8814 rather than filing a separate return for the child.4Internal Revenue Service. Revenue Procedure 2025-32 Including it on your return can raise your adjusted gross income and affect certain credits and deductions, so the IRS suggests comparing both methods to see which produces the lower total tax.6Internal Revenue Service. Instructions for Form 8814 At $13,500 or more, the election isn’t available and the child must file using Form 8615.3Internal Revenue Service. Topic No. 553, Tax on a Childs Investment and Other Unearned Income
Early Withdrawal and What Happens at Maturity
A CD locks the money in for a set term. Federal rules set a floor: at least seven days’ simple interest if you withdraw within the first six days after deposit.7eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) There is no federal cap, and many banks charge several months of interest for early withdrawals, with longer terms carrying steeper penalties.8HelpWithMyBank.gov. What Are the Penalties for Withdrawing Money Early From a Certificate of Deposit (CD)? Read the deposit agreement for the exact figure before you sign.
At maturity, most banks give you a short grace period, typically 7 to 10 days, to withdraw or change the terms without penalty. Do nothing and the CD usually renews automatically at the current rate for the same or a similar term. Put the maturity date on your calendar so you’re not locked into a new term by inaction.
FDIC Insurance on the Account
CDs at FDIC-insured banks are covered up to $250,000 per depositor, per bank, per ownership category.9FDIC. Deposit Insurance FAQs How that applies depends on the structure.
For a UTMA or UGMA custodial CD, the child is treated as the owner for insurance purposes, not the custodian. The CD is insured up to $250,000 as the child’s own account, separately from anything you hold at the same bank in your own name.10FDIC. Single Accounts A joint CD is covered under the joint account category, which provides up to $250,000 per co-owner at the same bank.9FDIC. Deposit Insurance FAQs
When Your Child Takes Full Control
With a custodial account, your role ends when your child reaches the transfer age set by your state’s law. The default is 21 in most states, but the range across states runs from 18 to 25, and a few states let the custodian specify a later age when opening the account. At that point, you transfer the CD into the child’s name and they gain full authority over it.
Joint accounts don’t have a formal transfer event. Both owners already have access, and the child can manage the account independently once the bank’s age requirements for solo account management are met.
The Effect on College Financial Aid
If your child will apply for federal financial aid, the account structure matters. The FAFSA treats UTMA and UGMA accounts as the student’s assets, no matter that the student is a dependent.11Federal Student Aid. Current Net Worth of Investments, Including Real Estate Student assets are assessed at a higher rate than parent assets in the aid formula, so the same balance in a custodial CD can reduce an aid package more than it would in an account held in your name. If financial aid is on the horizon, weigh that against the tax and ownership benefits of the custodial structure before you open the account.