Piggy banks are fun for small change, but if you want to teach your kids important lessons about managing money and the power of compound interest, get them their own savings account. While your local bank branch probably offers more than one savings account product, you might consider looking online for one that’s designed with children in mind.
To aid in your search, we have chosen savings accounts for children from a selection of nearly 100 kids’ savings options offered at banks and credit unions around the country. Review our methodology.
Capital One’s Kids Savings Account has all of the features you’d expect to see in a savings account for adults but with the additional feature of parental controls, which makes it a great overall solution for kids of all ages. The account earns 0.30% APY, has no monthly fees and can be opened with $0.
The Kids Savings Account parental controls allows parents to sign into the account under their own usernames and passwords to help their children manage their funds. Parents always control transfers in and out of the account, offering a good balance between independence for the young holder and parental oversight. Kids get to view their balance and watch their money grow.
Capital One lets you create an automatic savings plan linked with other accounts, so you can automatically transfer your child’s allowance into their Kids Savings Account. When it comes to geographical reach, Capital One has branch locations, a large ATM network and a great mobile banking app, which allows you to deposit checks and check balances.
There are plenty of different accounts available for college savings. Some of them, called 529 plans, are a kind of custodial account. They offer special tax advantages for parents to save for their kids’ future qualified educational expenses, but each state offers its own types of 529 plans. Be sure to see if there’s an account in your state that fits your needs.
For college students who are looking to jump-start their own savings, the DCU Primary Savings account is a great way to build compound interest quickly on balances of less than $1,000. Up to and including that first $1,000, DCU pays an APY of 6.17% — and the remaining balance over that amount earns 0.15% APY. There are no monthly fees for this account either, which can be a huge benefit to college students on a tight budget.
If you want to engage your child with educational tools, PNC’s S is for Savings account offers a lot.
The Learning Center features Sesame Street characters that will help them learn basic money concepts. The site has fun activities you and your child can do together.
Features include the ability to set up automatic savings deposits that help them see the benefits of having a savings routine. Kids can work towards goals and learn about the three components of money: saving, sharing and spending. As your child gets older, you may choose to transfer their accumulated balance to a savings account at a bank that offers a higher interest rate.
When your child turns 13, Alliant Credit Union considers them to be a young adult, offering their High-Rate Savings Account with a 3.10% APY on balances of $100 or more and no monthly fees. For teens who want to set savings goals, the credit union allows them to set up supplemental accounts that can be earmarked for specific items, such as saving for a new car.
What makes this a great option for a teen is that Alliant also offers an interest-paying teen checking account for kids ages 13-17. The checking account earns an APY of 0.25%. The two accounts can be linked and both will earn your teen interest. Alliant also refunds up to $20 per month in ATM fees if the teen uses out-of-network machines.
To open a bank account at Alliant Credit Union, you must be a member. Membership is open to employees or former employees of partner businesses or organizations, or you can join by making a $10 donation to the Foster Care to Success Foundation. You can also become a member of Alliant if your immediate family member or a domestic partner is a current Alliant member.
Spectrum Credit Union currently offers the highest interest rate on the market for a kid’s savings account, but only on a relatively limited balance. Spectrum’s MySavings account earns 7.00% APY on account balances up to $1,000, a rate that’s higher than many CDs. Balances over $1,000 earn the regular savings rate, which is 0.75%. A high interest rate can help get kids excited about savings as their balance will grow quicker.
Spectrum Credit Union currently has branches in six states, but deposits can be made nationwide through the Credit Union CO-OP Shared Network. Membership is open to anyone by joining the Contra Costa County Historical Society ($15 membership fee) or the Navy League of the United States ($25 annual membership fee).
Kids are digital natives, and that makes a kid’s savings account’s online banking features extra important. In addition to being our pick for best overall savings account for kids, the Capital One Kids Savings Account offers a great selection of online saving and budgeting tools that will keep kids engaged and informed.
One of the best features is the ability to create additional savings accounts and set a target goal for each account. For example, your child may set a goal for holiday gifts, another goal for a new bike or car and another goal for vacation money. They can even give each account a nickname, such as “My Wheels Fund.”
Capital One has a full suite of online tools for your child to track their progress and success, helping to keep them focused on their goals. Capital One also offers standard features on its mobile banking app, some of which are available for kids, including the ability to check their balance or make a mobile deposit.
It’s never too early to start teaching your kids about personal finance, and opening a savings account is a great way to help accomplish this aim. Parents who discuss financial topics with their kids at least once a week are more likely to have kids who say they are smart about money than those who do not have a discussion with their children.
Savings accounts show kids the value of saving at an early age. They get to watch their money grow as compound interest works its magic, and they can set short- and long-term goals for the money they save. The reward of achieving the goals will teach life lessons on patience and planning. Once you open an account for your kids, share money management tips with them, things like “paying yourself first” by saving a portion of gifts and allowances they receive instead of spending it all.
When you teach your child good money habits early on, you help set them up for success later in life. Putting your child on the path for financial responsibility and independence by choosing the best savings account for kids could be the greatest gift you can give them.
MagnifyMoney reviewed financial institutions and based our selections on how well they met these five criteria: