What is the difference between a teen account and a minor (UGMA/UTMA) account?

Minor custodial accounts (UTMA/UGMA accounts) and teen accounts are both financial tools designed for minors, but they differ in various aspects.

  • In a minor custodial account, the account is opened and managed by a custodian on behalf of the minor. The custodian has control over the account until the minor reaches the age of majority (usually 18 or 21 years old). Whereas a teen bank account is a joint account opened by the teen and the parent or guardian with the teen as the primary account holder.
  • With a minor custodial account, the custodian has full control and authority over the account. They make decisions and transactions on behalf of the minor, and the minor typically has limited access to the account until they reach the age of majority. With a teen account, the teen can manage their money, make deposits and withdrawals, and have a debit card.
  • With a minor custodial account, the custodian is legally responsible for managing the account and acting in the best interest of the minor. They have a fiduciary duty to handle the funds appropriately. In a teen bank account, the minor assumes more responsibility for their financial decisions, although some level of parental or guardian oversight may still be present.
  • Minor custodial accounts are ideal for long-term savings while teen accounts help with learning financial responsibility.

To see more details on the difference between these account types, check out our infographic.