Savings Account For Children: Things to Consider
What is the best savings account for children? This is a common question that every parent asks whenever they are planning for their children’s future. While savings account helps parents to save for the child’s futures, a savings account is usually the first step of guiding the child towards financial literacy. Apart from the resulting interest compounded by the savings, children get to learn the basics of savings and budgeting. It is, therefore, critical to choose a savings account that meets the current and future needs of your child. See what savings accounts are available at banks in your area:
Choosing a Savings Account for Children
So, what is the best savings account for children? The best savings account for children is that which gives the best returns and also fits how you are planning to save for your child. The key factors in choosing a savings account include how often you are planning to save; how much access you need; how you plan to manage the account; and the willingness to take some risks for a better return. Below are the top five best savings account that you should consider for your child’s future.
#1 Justice Federal Credit Union Grow with Me Account
This savings account requires a minimum opening deposit of $500 going up to a maximum of $10,000 and the maximum annual savings can go up to $1,000. The parent must be a member of JFCU to be eligible to open such savings account. The funds can’t be withdrawn for the first 12 months without a penalty since it is considered as a certification of deposit for first 12 months. Additionally, all dividends are forfeited if this account is closed before a child turns 18.
Justice Federal Credit Union Grow with Me account is considered one of the best savings account for children because it has a high starting APY of 4.47% and 3.3% regular dividend yield. After the first year, the rates normalize to the federal funds rate plus 1%. Additionally, the saving account converts to a Student Rewards Checking Account after the child turns 18. The estimated annual earnings from this account are $1,118.
#2 Alliant Credit Union Kids Savings Account
To own this account, the opening amount is a minuscule $5 which is paid by Alliant, however, the daily average balance has to be $100. The savings account is available to children of 12 years old and younger and the parent has to have a membership with the union. If the account is inactive for 12 months, then an inactive fee of $10 is levied. The estimated annual earnings from this savings account for children is $475.
A key advantage of the account is that it has a high APY of 1.8% and as per Alliant this rate is 20 times more than what the banks are offering. Getting the Alliant Credit Union membership is comparatively easier than the other credit unions because it is larger. The union allows anyone who is donating $10 to one of its associated nonprofit organizations to be a member.
The account’s website and mobile apps are easy to use and it has a couple of financial education programs which are for kids to make them self-sufficient with their money management. In addition, the account is free if the customer is enrolled in the e-statements otherwise a nominal monthly fee of $1 is charged for issuing paper statements. After the child turns 13, he becomes eligible for a Teen Checking Account with Alliant and the child can maintain both the accounts. The checking account holders are provided with a free debit card and can access funds in both accounts by this card. Check the most varying APY rates available for each savings accounts on your area.
#3 Northpointe Bank Kids Savings Account
This savings account for children does not require any minimum deposit amount or minimum daily balance. The account can be opened for children up to 17 years of age and the parent must open a joint or custodial savings account as children are not legally eligible to open an account on their own. An early account closure fee is charged if the account is closed within the first 120 days and a dormant account fee of $5 per month is charged if the account is inactive for 24 months. The estimated annual earnings from this account are $281.
A key advantage of the account is the 1.5% APY if the balance is below $1,000, the APY is 1.3% – 1.5% if the amount is greater than $1,000. The savings account is also secure with the FDIC insurance up to the maximum amount as allowed by the law. The bank provides higher interest for the Kid’s Account than opening a regular savings account with the bank.
#4 Capital One Kids Savings Account
This savings account for children mainly targets any kid under 18 especially for those in their pre-teen years and must be linked to the parent’s personal checking account through which the deposits are made. There is no minimum deposit is required for opening this account. The estimated annual earnings from this account are $250.
The account has an APY of 1.0% and it is irrespective of any amount of money in the account at any particular time. The automatic savings plan is an added benefit of this account which allows the children on a deposit schedule which enables them to send regular allowances as many times as they like. Additionally, the bank offers a hands-on approach for savings through its mobile app, customer services, representatives and learning resources. The savings account does not charge any monthly maintenance fees.
#5 Garden Savings FCU Kids Club Savings Account
This savings account is mainly targeted for any kid under the age of 18. The account requires a minimum deposit of $5. Garden Savings FCU Kids Club savings account has an APY of 1.0%. The estimated annual earnings from this account are $250.
A significant advantage of the account is that the service account does not have any monthly service fee or minimum balance requirements. The account provides digital banking services such as online banking, mobile banking and e-statements free of cost.