How to Give a Certificate of Deposit to a Minor

A certificate of deposit (CD) is a safe way to invest money. You loan money to your bank, which then lends it to other people, and in return, the bank pays you interest. The interest rate is relatively low compared with other investment options, but the investment is very safe. For those wishing to introduce a child to investing and money management, or for those wishing to give a financial gift to a minor, a CD is a good choice.

Step 1

Go to the bank where you intend to purchase the CD. This can be your bank, or any bank you prefer. By checking online to see what rates different banks are offering, you can find the best interest rate possible for your investment.

Step 2

Fill out the form to open a CD. List the minor as the owner of the CD and yourself as the account custodian, as the child must be 18 to take full possession. You will need both your Social Security number and that of the child.

Step 3

Deposit the money you want to invest in the CD with the bank. Make sure the minor understands that once you have done this, the money is not accessible to until the CD reaches maturity. There are different term lengths available, and generally speaking, the longer the term, the higher the interest rate.

Step 4

Discuss with the minor what to do with the money when the CD reaches term, especially if the minor will be an adult and able to manage the account when the CD matures. If that's the case, you might need to go back to the bank and have your name removed as account custodian.

Items you will need

  • Photo ID
  • Full legal name of the minor
  • Social Security number of the minor

Tip

  • Many banks require a minimum deposit for a CD. Make sure you are aware of the minimum amount beforehand and can make the financial outlay.

Photo Credits

  • Keith Brofsky/Stockbyte/Getty Images

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