Children’s savings accounts are a great way to instill smart money habits early on to make sure our kids grow into financially responsible adults. Some of the best gifts and lessons parents can give to their children are money management skills, financial responsibility, and the importance of a savings culture. Teaching and demonstrating this value to your kid at a young age through a savings account is one of the best ways to impart this knowledge. But how do you determine the best among the bunch?
We have scoured through dozens of children savings account on offer from reputable banking institutions and selected the top ten based on their bonuses, annual percentage yield (APY)*, financial education tools on offer, monthly fees, and minimum deposit requirements. Instilling the habit of saving money can help children avoid a lot of grief later in life. A good age to start teaching a child about money is between 6 and 8.
*Since APY rates are variable and change based on the economy/market we are not listing them here. Please refer to the financial institution’s website to get the most current APY rate information.
How to Open a Bank Account for Children
When opening a bank account for your child, it’s important to choose a strong financial institution and the right type of account. While it might be possible to open a checking account for your child, it’s better to open a savings account.
Call your local banks and credit unions to ask what accounts they offer for children. Shop around because you might find better features where you least expect. For instance, credit unions often provide higher APYs than traditional banks.
Your child’s savings account should have the following features:
- No ongoing maintenance fees
- No (or low) minimum balance requirements
- The highest yields you can get
- An ATM card (used for depositing, not spending)
If you can’t find a financial institution that will open an account in your child’s name, you could share an adult savings account with your child. However, that should be your last resort. It’s more beneficial to teach your child using an account in their own name.
Opening a savings account for your child will benefit them in the following ways:
- They’ll learn through experience how money grows
- They’ll see the importance of tucking away money from each paycheck when they start working
- They’ll see the potential for growing a savings account over time that will help them pay for things they want with less effort
- They’ll get better at math
- They’ll learn how to deposit checks with a teller and through an ATM machine
- They’ll learn how to use online banking to check their balance, use an app for mobile deposits, and verify all of their transactions
Find an institution that provides special perks for kids. For instance, some children’s bank accounts offer free money on their birthday.
Finally, be cautious about opening a custodial account. These accounts have two big drawbacks:
- Custodial accounts are treated as assets and you’ll be required to pay taxes on any yields.
- Custodial accounts can disqualify a student from receiving financial aid for attending college
The Top Ten Children’s Savings Accounts
ALLIANT CREDIT UNION KIDS SAVINGS ACCOUNT
Alliant’s online kids 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. 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.
BECU (Boeing Employee Credit Union) EARLY SAVER ACCOUNT
BECU’s children’s savings accounts have all the hallmarks of a good account for members of this credit union and their children (check website for eligibility requirements). The BECU Early Saver Youth Account Features:
- No monthly service fees
- No minimum balance to open
- Joint ownership for parents or guardians (joint owner must be approved for BECU membership)
- Free online banking and free mobile banking (kids 13+)**
BANK OF AMERICA MINOR SAVINGS ACCOUNT
The Bank of America kid’s account can be opened for children younger than 18 at a branch with a $25 minimum deposit. There is no monthly fee and no minimum daily balance required, but it needs to be jointly owned by the minor and a parent/guardian. Bank of America also offers a Custodial (UTMA) Savings Account that gives them control of the account as a gift for when a child reaches maturity (minors cannot access the account until they turn 18). Fees apply for this account if minimum daily balance is not met. Bank of America’s site also has educational content teaching children about money.
CAPITAL ONE KIDS SAVINGS ACCOUNT (formerly known as the 360 Kids Savings Account)
Capital One Kids Savings Account gives kids access to tools including the automatic savings plan and My Savings Goals tracker. They get their own log-in to check their balance, but adults will have to transfer money to and from the account. No fees and $0 minimum deposit to open an account. The account doesn’t have a maintenance fee and allows children to set up a savings goal. The account’s app also features parental controls and Capital One’s website has Kids Savings Account: 101, which features the basics regarding saving.
CHASE BANK KIDS SAVINGS ACCOUNT
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.
FIFTH THIRD BANK GOAL SETTER SAVINGS
Fifth Third Bank’s Goal Setter Savings Accounts are ideal for teaching children how to save and budget. One of its unique advantages is the Savings Account Bonus feature that allows customers to set a savings goal and, once that goal is met, Fifth Third will give them a one-time savings account bonus toward their next goal. They also offer competitive savings accounts rates and a low monthly service charge of $5. However, if you meet one of the following criteria, they’ll waive the monthly fee:
- You have a Fifth Third Checking Account or Express Banking account
- Monthly service charge waived for the first six months (185 days)
- You maintain an average monthly balance of $500 or more
- Someone under age 18 is an owner of the account
- You are enrolled in Fifth Third Military Banking
JUSTICE FEDERAL CREDIT UNION YOUTH ACCOUNT
The Justice Federal Credit Union offers three types of children’s savings accounts:
- Young Savers account available for kids 18 years or younger; only $5 to open an account with no monthly service fees or minimum balance requirement
- Grow with Me account, a unique high-yield savings account that grows with the child until they turn 18. No monthly fee, $500 minimum deposit to open an account, and the option for family, friends, and relatives to contribute up to $1,000 in new money deposits. The account automatically converts to a Student Rewards Checking Account when he/she turns 18—just in time for college!
- Coverdell Education savings account that helps parents pay for a child’s education at any level.
Though JFCU doesn’t offer a program on online banking, it does have one on cyber safety. The credit union teamed up with the FBI to offer their Safe Online Surfing Internet Challenge, which teaches students in third through eighth grades how to recognize and respond to online threats.
PNC BANK KIDS ACCOUNT
PNC offers parents several tools to help them stay connected to their child’s finances. Virtual Wallet® Student provides the support kids need to safely and securely manage their money. PNC also has a Parent Alerts option that sends parents the same account alerts as students even if they are not joint account holders. Their Money From Home service makes it easy for parents to deposit funds into their child’s account, or, link their existing PNC Bank account with their child’s account for added overdraft protection. There are two options:
PNC’s ‘S’ is for Savings account helps teach young children financial basics through an interactive, online experience with Sesame Street® plus tips on learning financial basics.
- No service charge for account holders under 18
- Interest on balances starting at $1.00
- With Goal Setting, set specific savings goals with your child that they can achieve over time
The PNC traditional Standard Savings account is another great way to teach children positive money management with auto savings tool and only $25 to open an account. At PNC, Savings accounts for children under 18 are always free, with no minimum balance requirement.
TD BANK SIMPLE SAVINGS
TD Bank’s children’s savings accounts are really just an everyday savings account but they waive the monthly maintenance fee and minimum daily balance requirements for savers aged 18 or younger. Other perks include free automatic transfers from other accounts (allowing parents to automatically transfer to the account for free) and earned interest on the savings account.
USALLIANCE FEDERAL CREDIT UNION MYLIFE KIDS SAVINGS ACCOUNT
Children earn $10 in “Birthday Bucks” (on USAlliance) each year with this savings account The account transitions into EITHER a MyLife Teen Checking account or a MyLife Savings account when the child turns 13. The USALLIANCE Federal Credit Union website has a budgeting aid and a Financial Education page that has a Student Center.
WELLS FARGO WAY2SAVE®
A Wells Fargo Way2Save® Savings account only requires a $25 minimum opening deposit and has no monthly service fees for account holders under 18 (19 in Alabama). Free online transfers between Wells Fargo accounts, and free online statements to help teach money management There are three options:
- Joint ownership. This option gives your child the ability to use the savings account while you monitor account activity. Both you and your child can make deposits and withdrawals. An optional ATM card is available for your child. The account may be linked to a Wells Fargo Debit Card. Wells Fargo Online® access is available when your child reaches age 13.
- Minor by. This option gives your child access to their funds at age 18. Before that, only you can make deposits and withdrawals, as well as link the account to a Wells Fargo Debit Card.
- Uniform Transfers/Gifts to Minors Act (UTMA/UGMA). This option is for adults making an irrevocable gift to a child. One adult custodian has sole control and access to the funds until the child reaches an age defined by your state’s Uniform Transfers/Gifts to Minors Act (typically age 18).
The Bottom Line
There are so many lessons kids can learn through a savings account. It teaches them to plan ahead and stay focused on goals and priorities. It shows how their money can grow, and build patience as they save and wait until they can afford an item before purchasing it, and not to waste money.
We recommend starting with a savings account first (not a checking account—that’s for spending). Additionally, while kids are incredibly tech-savvy, it’s imperative that they learn proper banking etiquette with tellers at a brick-and-mortar location. For a young child just learning about money, the tangible experience of visiting a physical bank reinforces solid financial lessons.
Choosing to open a children’s savings account from any of these banks is a great idea, however, some of the above-listed banks do no operate in every state, so you may need to check to see if they offer the service in your state before proceeding. Additionally, credit unions have membership requirements so you’ll need to review those first.
To maximize the yield on children’s savings accounts, compare rates on various savings accounts.