One of the greatest gifts we can give a child is to teach them financial responsibility at a young age, and savings account for children can go a long way in this effort.
Teaching your children financial responsibility from a young age can help them reap incredible benefits later in life. Opening a savings account for kids can be one of the first steps in this educational venture.
What is a Kids Savings Account?
Kids’ savings accounts are savings accounts that can be opened at most traditional banks and credit unions on behalf of a child. They must be opened jointly, so both the child and parent or guardian’s names are on the account.
Many have no minimum age requirement, although as the child ages, they may have to shift their funds to youth, student, and eventually, adult savings accounts.
Kids’ savings accounts often come with waived fees and financial education programs that help teach kids healthy savings habits.
When Should I Get a Kids Bank Account?
Open a kids bank account once your child has a baseline understanding of the concept of money. This age may vary from child to child, but by 6 years old or so, most children have a basic understanding of money.
By 9 years old, your child should be mature enough to set small financial goals. You’ll want your child to be invested in the idea of having a savings account that’s theirs.
Take them to the bank with you and set up a mobile app on their phone (if they have one) so they can check their balance and their progress.
Factors to be Considered Accounts for Children
So let’s turn to some of the best savings accounts for kids. When we compiled this list, we considered several factors:
Interest Rate: A high-interest savings account can help a child understand the importance of finding the best deals. While the interest rate isn’t the only consideration, it’s obviously an important one.
Low Fees: With many bank accounts for kids, the amount of money saved will be relatively small, at least to start. The last thing you want is fees eating away at the balance.
Low Minimum Balance: Some banks either require a substantial minimum balance or charge extra fees if a certain balance is not maintained. Unless your child’s bank account will exceed these minimums, it’s best to avoid these accounts.
Fun: Yes, a bank account can be fun. And particularly for young children, the fun factor can go a long way in teaching kids about money.
Best Savings Accounts for Children
Alliant’s online kid’s savings account is available for children 12 years and younger. Even if you don’t work for an employer linked to Alliant Credit Union, you can still pay $5 and Alliant will donate it on your behalf to Foster Care to Success so that you’re eligible to open an Alliant account.
Alliant has educational content on its site and encourages children to use the Alliant Mobile Banking App to learn about banking firsthand. Also, Alliant offers custodial accounts, a 529 plan to help save for educational expenses, or a traditional kids savings account.
Alliant Credit Union partnered with Visa to offer “The Money Guide,” an introduction to money management for kids ages eight to 12.
Through a collection of games, calculators, worksheets and podcasts, your kids will learn the basics of budgeting, saving and borrowing — and how to apply these topics to their everyday life.
Capital One offers a good APY on savings accounts and doesn’t charge fees or require a minimum deposit requirement, which makes it a solid choice for a kids savings account.
This bank also has a mobile app that your child can use to look up information on their account, but they’ll need a parent or guardian’s help to move money in or out of the savings account.
You can also set up automatic deposits, set savings goals and link accounts.
Making a deposit is simple; you just upload a photo of a check through the app or mail it to the bank in an envelope. Capital One has excellent online customer support and is available 24/7 via phone and Twitter.
Chase savings account for people younger than 18 comes with no monthly fee and a small minimum deposit requirement of $25. It offers all the regular benefits and features of a savings account, allowing children to understand banking transactions while establishing their financial history.
Chase also has online guidance, tools, and lessons that parents can use to help children develop good money habits at any age.
PNC offers “S is for Savings” accounts, which are directly targeted at younger children. While the APY rate on those accounts is low, there are no monthly fees for anyone under 18, and PNCoffers online tools featuring Sesame Street characters to help your child learn about savings and money.
PNC breaks their information in the app down into three categories: saving, sharing, and spending. There are also online activities you and your child can do together to help them learn about money.
While the interest rate isn’t as high as some, the online education features make PNC worth a look. You can also take advantage of goal-setting options and you have an unlimited number of deposits available with this bank.
The only caveat is that if you want to open a savings account for your child, you will have to put the savings account in your name because Ally does not offer joint accounts. They do provide custodial account options, though.
Is a kid’s Savings Account Right for you?
Whether or not a kid’s savings account is right for you depends on your goals. These accounts can be a wonderful option for teaching your child to save early on and giving them a sense of ownership over the money they save.
However, if you’re looking for the best returns on your savings, there are better options. For college savings, tax-deferred accounts like a 529 plan are a wise choice. If you’re planning on helping your kids save for the long run, consider investments like bonds, brokerage accounts, or a CD ladder.
Even if you’re only concerned with short-term savings, a regular high-yield savings account will probably get you higher rates than any kid’s savings account.
Whichever you choose, getting started early can teach your child valuable lessons in ownership and responsibility while also giving them a head start financially.
A savings account is perfect for teaching children how to save, a skill that will come in handy down the line as an adult.
Plus, a savings account also offers higher interest rate returns on their money, and savings accounts often have lower fees than checking.
If this article is useful then so will your friends, why not share it on your social media platforms.