A savings account is an excellent tool for teaching children the value of money and financial management. However, before you open a savings account for your child, you should look for a few key features.
Here are some of the best savings accounts for kids, including those with no minimum balance requirements, no fees or ways to avoid them, and competitive APYs.
The best savings accounts for children
Each of these savings accounts is an excellent place to begin a child’s banking journey. Before opening a savings account for your child, look into the account opening age restrictions, fees, and what happens when the child reaches a certain age.
Alliant Kids Savings Account
The Alliant Kids Savings Account requires a $5 initial deposit, which is covered by the credit union. The account has a 3.1% annual yield, but no interest is paid if the daily balance falls below $100. There is no monthly fee as long as you receive e-statements rather than paper statements.
The account includes a mobile banking app that allows you and your child to digitally monitor the account’s funds, make deposits, and view the amount of interest earned. To continue their financial journey, children aged 13 and up can apply for an Alliant Teen Checking Account.
Alliant Credit Union is rated the best credit union by Bankrate, so it’s no surprise that this savings account includes useful features that will help children learn more about money.
Why did we choose it: For a children’s savings account, the Alliant Kids Savings Account offers a competitive yield.
Capital One Kids Savings Account
The Capital One Kids Savings Account has no fees, no minimum balance, and pays 0.3% APY on any balance.
The account offers a mobile app that allows children to check account balances in addition to earning interest, but the dual-access account requires adult supervision to transfer funds out of the account. Capital One was named the best large bank by Bankrate.
Why we chose it: You are not required to wait until your child reaches a specific age to open this account. This account can be opened with a baby by a parent or legal guardian. When the child reaches the age of 12, grandparents can open one of these accounts.
PNC’s ‘S’ is for Savings
PNC Bank’s ‘S’ is for Savings account is intended to help younger children learn about money and banking. The online financial education tools in the account are extensive and feature your child’s favorite Sesame Street characters.
The account is accessible to children via the PNC Mobile Banking app. The app’s goal is to provide your child with an interactive banking experience that teaches them about “saving, sharing, and spending.”
The account has no minimum deposit requirement and a $5 monthly fee that can be waived if:
—The account owner is under the age of 18.
—A minimum monthly balance of $300 is maintained.
—At least one automated transfer of $25 or more from a PNC checking account occurs each statement period.
The APY offered is extremely low, at only 0.01% APY. With that in mind, the account is probably best suited for younger children who still have a lot to learn about money basics. They’ll be more likely to engage in concepts, such as what their interest is, with the help of amusing characters, even if they’re not earning much of it.
Why we chose it: The bank has a Sesame Street learning center where kids can learn from the characters.
Boeing Employees Credit Union Early Saver Account
BECU Early Saver Account from Boeing Employees Credit Union has no monthly fees and no minimum opening balance. Children who save earn an extremely competitive 6.17% APY on the first $500 they save, while amounts above that earn only 0.5% APY, which is comparable to rates offered by traditional bank savings accounts.
Though the credit union was founded for Boeing employees, membership in BECU is now open to anyone who lives or owns a business in Washington state, as well as select counties in neighboring states, or who is affiliated with certain organizations. Because of the geographic restriction, the account is not available everywhere and may not be a viable option for those who live outside of its service area and have no connection to Boeing.
Why we chose it: The yield on the balance for amounts less than $500 is very competitive.
Pen Air Federal Credit Union Level Up Youth Account
The Level UP Youth Savings Account from Pen Air Federal Credit Union pays 0.3% APY on all savings balances. Accounts can be opened at a Pen Air branch in northwest Florida or southern Alabama, but they can also be opened online if one of the following membership requirements is met:
—Military service, active or retired.
Employee of the civil service.
—Working for a collaborating employer group.
—Instant family members of those eligible for membership.
Why did we choose it: For children aged 8 to 18, the Pen Air Federal Credit Union Level Up Youth Account includes a debit card.
—How come my child needs a savings account?
A savings account is an excellent tool for teaching children about money. By gradually building savings throughout childhood, children can develop good money habits, learn the value of saving, and understand the value of money.
—How do you set up a savings account for your children?
In most cases, you can open a children’s savings account online. All you have to do is provide some basic information about yourself and your child. If your application is approved, you can make your first deposit and begin using your account.
—Are you required to pay taxes on your children’s savings accounts?
You don’t have to pay taxes if your child’s unearned income (including investments and interest) is $1,250 or less for the year. If the amount is between $1,250 and $2,500, the income is taxed at your child’s tax rate. Anything over $2,500 is taxed at the parent’s marginal tax rate, unless the child’s marginal tax rate is higher.