If your children get an allowance, or you want to start saving money for your kid’s college, it is beneficial to open tailored online savings accounts for kids. Fortunately, many famous financial institutions offer banking services and other savings solutions tailored to kids and parents.
Suppose you are looking at paying for future college tuition and fees. In that case, UNest offers a tax-advantaged investment account to help you save money towards your children’s education while saving money in tax. However, opening a bank account at an early age can also put your child on the path towards financial success, whatever your reason may be.
Investment Account for Kids
Savings Accounts for Kids
A child can have their own joint account with their parent at any age. Once the child is around 12 or 13 years old, they can also open a joint checking account. Parents will be able to monitor both accounts until the child is a legal adult. You can choose to go into a branch or use a digital solution to open an online saving account for your kid.
What Are The Benefits of An Online Savings Account for Kids?
The biggest perk of a children’s savings account is teaching your child responsible money management. It encourages them to save up for toys or video games, as well as fun outings. A bank account is also a safer place for a child to store their allowance. Kids might misplace a piggy bank or lockbox, and these can also be stolen.
Saving up for their goals also instills a sense of confidence in your child. It’s a great feeling to be able to pay for something yourself with the money you’ve saved over months and years. Creating that positive association early on encourages your child to be frugal for the rest of their lives. They’ll be more inclined to save up for larger purchases, like their first car.
Having a bank account of their own will also broaden your child’s vocabulary and knowledge of the financial industry. Many adults accrue poor credit early in life because they were never taught to spend money wisely. Your child will have a head start learning all the ins and outs of financial stability with their first savings account.
You’ll be able to closely monitor your child’s activity on both their savings and checking accounts. Overdrafting your account can happen even with careful financial planning, especially in emergencies. If this happens to your child, take it as a learning experience. You can give them helpful tips on how to prevent overdrafts and late fees in the future.
Suppose you are looking into saving money for your kids’ education. In that case, you may want to consider other solutions rather than online savings account for kids to take advantage of extra features and benefits.
How Do You Choose the Right Kids Saving Account?
When searching for the right savings account for your children, keep the following factors in mind:
1. The Purpose of the Account
Think about what you want to save for with savings account for your kids. If you’re going to teach them financial responsibility and how to save money, you may want to look at opening online savings accounts for kids. However, if you want to save money for their future education, a tax-advantaged investment account for kids may be a better solution with better financial benefits for you.
2. The Interest Rate
Interest is the amount of money your child will receive from the bank just from having an open savings account. This can also be an incentive for your child to increase their savings, allowing them to reach their goals sooner. Interest rates are usually dependent on the current economy and differ between each bank.
3. The Fees
Some children’s savings accounts will have hidden overdraft fees, maintenance, debit card replacements, or inactivity. Ideally, your child should have a bank account with as little of these extra fees as possible.
4. The Minimum Balance
Some banks require users to keep a minimum balance in their accounts to avoid hidden fees, even children. Fortunately, many banks will immediately repay this fee or hold it until the child turns 18. It’s also possible to find a children’s savings account with no minimum balance.
5. The APY
APY, or annual percentage yield, is the total of a kid’s savings account interest rate and compounding interest. As with interest rates, this figure will vary between different banks, and you want to choose a higher one to make the most of the savings.
Investment Account for Kids
Popular Long Term Online Savings Accounts For Kids
If you decide to allow your children to save money that will not go towards their education, you may want to review some of these options:
- The Capital One Kids Savings Account has no maintenance fees, is entirely free to open, and has a competitive APY. You can also use the Automatic Savings Plan feature to transfer money from your balance directly into your child’s account. Kids can check their balance and upload checks in their name at any time with the Capital One app. The Teen checking account also comes with a fee-free debit card. However, this account requires many parental permissions for essential functions, like transferring money between accounts.
- The BECU Early Savings Account has no minimum balance fee and a higher APY if your child beyond a certain minimum balance. A free checking account is also available when the child turns 18, and both accounts have no monthly fees.
- The Alliant Kid Savings Account features a convenient online app and a good APY that requires your kid to keep a minimum average monthly balance to earn interest. Alliant charges some fees for the initial deposit, paper bank statements, account inactivity, or insufficient funds. Fortunately, you can opt for digital bank statements to avoid the paper statement fee, and Alliant repays the initial deposit fee.
- PNC’s ‘S’ is for Savings account where PNC partnered with Sesame Street to craft exclusive, engaging financial lessons for young children who use this account. Your kids can start earning interest on money right away as long there is some money in the account. You will need a small deposit to open the account and a small monthly maintenance fee that can be waived by keeping a certain average monthly balance in the savings account.
UNest: Online Tax-Advantage Investment Account for Kids
While many children’s savings account have reasonable interest rates and low fees, they are not explicitly designed to save money for your kids’ future education. They don’t either allow you to take advantage of other financial perks, like saving money on taxes.
UNest is a kids investment account geared towards future educational goals. The free mobile app even has a college calculator to determine how much your child needs to save yearly.
The UNest investment account is also highly flexible, easily modified depending on the age of your child. Each age group has recommended auto-deposit amounts that create a personalized investment portfolio. Every account receives tax benefit earnings, and account owners can also get rewards on many popular retail brands and invite friends and family to contribute to their children’s savings.
Setting up a UNest account is also a simple process:
- Download the UNest mobile app.
- Provide the names, birthdays, SSNs, addresses, and U.S. Citizenship information for you and your child.
- Choose your plan and add your children.
- Input your child’s goals and start planning in as little as five minutes.
- Keep everything under control through the easy and convenient mobile app.