If you’re teaching your kids the value of a dollar, you can take the old-fashioned route — putting coins and cash in the piggy bank on the shelf. But nowadays, banks offer a better alternative that both parents and children can take advantage of.
Savings accounts allow children and teens to store their savings in a safe place and benefit from some perks. While this old-school approach can be fun, the right savings account can offer lessons in personal finance and may be useful for helping your child earn more to meet their savings goals.
Here’s a rundown of the best savings accounts for kids and teens, and how to choose one right now.
What is a children’s savings account?
The Children’s Savings Account is designed with the young saver in mind. Here’s how it works: A parent or guardian opens and co-owns their child’s bank account, in most cases, though there are some exceptions for teen accounts. Kids can then transfer, deposit and withdraw money. The best savings accounts for kids have low fees, no minimum balance, and a mobile app for parents and kids to easily manage the account. Depending on the account, parents can generally set controls for their children to prevent them from overspending.
Some banks require parents to link their offshore bank accounts for transfers. Child savings accounts are generally for those under 18, but some banks require children to be at least 12 years old.
The best savings accounts for kids and teens
3.10% APY $100 minimum balance No fees Comes with ATM card Must be a member to open an account Ages 12 or under
Alliant Credit Union’s Kids Savings Account pays a very competitive APY of 3.10% once the account reaches an average daily balance of $100. It comes with a handful of parent-friendly perks, including online account tracking of your child and mobile check deposits via the app. The account also comes with an ATM card to help children learn how to make deposits and withdrawals at ATMs.
It is only designed for children 12 years of age or younger. When your child turns 13, they will be eligible for an Alliant Teen Checking account that comes with a savings account.
However, you will need to be an Alliant Credit Union member to open an account. The easiest way to qualify is to become a Foster Care 2 Success member; Alliant will cover the one-time $5 membership fee.
Read Alliant Credit Union Banking Review.
Best for teens
First Internet Bank in Indiana
0.80% APY No fees or minimum balance requirements Requires a minimum deposit of $100 for ages 18 or under
The Tomorrow’s Tycoons account from First Internet Bank checks two of the most important boxes in a children’s savings account: no fees and the ability to earn interest. Although the account does not come with an ATM card and requires a minimum deposit of $100, the account also pays 0.80% APY. Converts to a free savings account when your child turns 18. Until then, a parent or legal guardian must be a joint account holder. Keep in mind that First Internet Bank is an internet-only bank, so you need to be comfortable managing the account online with your kids.
0.30% APY No fees No minimum balance required Ages 18 or under
Capital One’s Performance 360 Savings Account is already on our list The best savings accounts for adultsAnd their children’s savings account can be a great starting point for your children.
There are no fees or minimum balance requirements, and you can even show your child how personal banking works at a Capital One branch, ATM or coffee shop. While the APY is only 0.30%, it’s still much better than other big banks.. Some of the pieces we love about this account: You can link your offshore bank account to your child’s savings account to schedule sending their benefits while still depositing on a regular basis. We also love that parents can create multiple accounts for different goals while still using the Capital One app to manage their savings.
Read Capital One Bank Review.
best to earn interest
Federal Credit Union Bethpage
5.00% APY on balances up to $1,000 Minimum deposit $5 No monthly fee Ages 20 or younger
The Bethpage Federal Credit Union Student Savings Account is available to children up to the age of 20, so this account can serve your child for a long time. However, digital banking services are only available to children aged 13 and over.
You’ll need a minimum deposit of $5 to get started and there’s a $1,000 ATM withdrawal limit which might be worth keeping in mind if your child is saving towards a big goal. An APY of 5.00% is certainly a compelling offer, but you’ll only earn this on up to a $1,000 balance. However, account holders still earn interest on larger balances – between 1.39% and 5.00% on balances between $1,000 and $10,000. Although Bethpage’s physical locations are limited to New York, you can open and manage an account digitally anywhere across the US — just keep in mind the 13-year or older limitation for digital banking.
No minimum deposit No monthly fee for account holders under the age of 18 Provides an interactive educational experience with the characters of Sesame Street for ages 18 or under
PNC’s S Savings Account sneaks onto our list because of a design that helps make learning about budgeting fun. Let’s face it: Your child may not be interested in hearing your point about saving, but they’ll be more than willing to hear Elmo, Cookie Monster, and other familiar Sesame Street characters talk about money. You can also teach them to manage money at one of PNC’s 2,600 personal branches or manage the account entirely online.
There is no minimum deposit and no monthly fee for anyone under the age of 18. However, there is one drawback: the interest rate is a paltry 0.01% for balances of at least $1.00. But this is not too surprising since The best savings rates Generally not found in the big banks.
Although you can technically keep this account once your child turns 19, though, you may have to pay a $5 monthly service fee if you don’t meet the minimum balance requirement. However, fees are waived for children 18 years of age or younger.
Read PNC Bank Review.
The pros and cons of savings accounts for children and teens
Should you open an account for your child, or stash some of their money in your own account? Since your child will be in the initial stage of managing their money, this decision will take some extra work on your part and how you want to teach your child about money. You may be tempted to give your child more autonomy with their own savings account, but you also may not want to manage another.
Here are some of the pros and cons to consider before opening another account.
Positives
Kickstarts financial literacy and money management skills, including saving and goal setting
Parents can be co-owners of the account for full access
Many profitable savings account options
FDIC or NCUA insurance to protect your money
They usually come with no fees and low minimum balance requirements
cons
Limited availability at major banks
It often requires a parent to have an account with the same organization
The potential interest may be lower than in adult savings accounts
Some children may not be eligible for accounts after a certain age
How to choose a savings account for your child or teen
When choosing the best savings accounts for your child or teen, here is a rundown of some key tips to follow:
Look local: There are quite a few credit unions that offer extra perks with their savings accounts, like rewards for good grades, like the Sky Federal Credit Union. These tend to be smaller local financial institutions – which is why they don’t appear on our list. But if there’s one in your city, it can be a huge win-win: better academic performance and better personal finance habits.
Start where you’re already in business: Many organizations require that the parent or guardian of the child savings account owner have an account at the same bank or credit union. If you do not wish to open another account elsewhere, start with the place where you have already acted. Since adult accounts often come with fees and minimum balance requirements, be sure to consider your financial situation, including your savings APY, minimum balance requirements, and fees.
Ask about education tools: A savings account should provide children with more than just a place to deposit their money. Rate the bank’s mobile app to see if it’s an easy way to talk to your child about money — some offer financial literacy courses and games, like PNC. If your child simply sees the balance of savings, he won’t really learn much. Instead, money management guides and lessons can help them make smart budgeting decisions.
How to open a savings account for your son
The requirements for opening a savings account for your child vary from bank to bank. In general, you will need to follow these steps:
Find the right bank and account for you: While some online-only banks can offer higher savings rates, credit unions also have some perks on hold. Think about what banking services and products you’ll need along with your child’s savings account because some institutions may require the co-owner of the account to have an account there as well.
Gather Your Information: Regardless of whether you need your own account, you will need to include your personal data—including your Social Security number and your child’s number—as a co-owner. The bank will also need your child’s Social Security number or current passport, but if your child is older, you may also want to include their school ID or driver’s license. In addition, the bank will need other personal information, such as a physical address, phone number, and email.
Complete your application for your child: Many banks and credit unions will allow you to submit your application for a child savings account online. However, there are exceptions. Some require you and your child to visit a branch or schedule a virtual account opening appointment.
Make the initial deposit: Although a lot of children’s savings accounts don’t require any minimum deposit, it’s still smart to fund the account. Be sure to ask your bank about deposit requirements such as cash, check, or direct deposit. Consider an automatic monthly transfer arrangement, too. For example, if your child is old enough to understand the concept of a subsidy, you can also transfer money after the chores are done to show the value of the work for money.
bottom line
No matter what your child decides to do when he gets older, there is one essential skill he or she will need: a solid understanding of money management. Opening a savings account for your child gives you a chance to keep track of their money, get closer to savings goals and understand the impact of smart spending habits.
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