If you’re teaching your kids about the value of a dollar, you could take the old-fashioned route -- putting coins and cash in a piggy bank on the shelf. But nowadays, banks are offering a better alternative that parents and kids can both benefit from.
Savings accounts for kids and teens let them park their savings in a safe spot and take advantage of a few perks. While that old-school approach can be fun, the right savings account can offer personal finance lessons and may even come with interest to help your child earn more toward their savings goals.
Here’s a rundown of the best savings accounts for kids and teens and how to choose the right now.
What is a kids savings account?
A kids savings account is designed with a young saver in mind. Here’s how it works: A parent or guardian opens and co-owns the bank account for their child, in most cases, although there are some exceptions for teen accounts. Kids can then transfer, deposit and withdraw money. The best kids savings accounts have minimal fees, no minimum balance requirement and a mobile app for parents and kids to both conveniently manage the account. Depending on the account, parents generally can set controls for their kids to prevent them from overspending.
Some banks require parents to link their external bank account for transfers. Kids savings accounts are generally for those under 18, but some banks have a requirement for children to be at least 12 years old.
Best savings accounts for kids and teens
Best for younger children
- 3.10% APY with a $100 minimum balance
- No fees
- Comes with an ATM card
- Must be a member to open an account
- For ages 12 and younger
Alliant Credit Union’s Kids Savings Account pays a very competitive 3.10% APY once the account reaches an average daily balance of $100. It comes with a few parent-friendly perks, including tracking your child’s account online and mobile check deposits via the app. The account also comes with an ATM card to help kids learn how to make deposits and withdrawals at ATMs.
It’s solely designed for children 12 years old and younger. When your child turns 13, they’ll be eligible for the Alliant Teen Checking Account, which comes with a savings account.
However, you’ll need to be an Alliant Credit Union member to open an account. The easiest way to qualify is to become a member of Foster Care 2 Success; Alliant will cover the one-time $5 membership fee.
Read our Alliant Credit Union banking review.
Best for teenagers
First Internet Bank of Indiana
- 0.80% APY
- No fees or minimum balance requirements
- Requires a minimum deposit of $100
- For ages 18 and younger
First Internet Bank’s Tomorrow’s Tycoons account checks all the most important boxes of a kids’ savings account: no fees and the ability to earn interest. Even though the account doesn’t come with an ATM card and it requires a $100 minimum deposit, the account also pays a 0.80% APY. It converts to a Free Savings account when your child turns 18. Until then, a parent or legal guardian must be a joint account holder. And keep in mind that First Internet Bank is an online-only bank, so you’ll need to be comfortable managing the account online with your kids.
Best for in-person banking
- 0.30% APY
- No fees
- No minimum balance requirement
- For ages 18 and younger
Capital One’s 360 Performance Savings account is already on our list of the best savings accounts for grown-ups, and its Kids Savings Account can make a great starting point for your children.
There are no fees or minimum balance requirements, and you can even show your kid how in-person banking works at one of Capital One’s branches, ATMs or cafes. While the APY is only 0.30% that’s still much better than other big banks.. A few pieces we love about this account: You can link your external bank account to your child’s savings account to schedule sending their allowance and still make regular deposits. We also love that parents can create multiple accounts for different goals and still use the Capital One app to manage their savings.
Read our Capital One Bank review.
Best for earning interest
Bethpage Federal Credit Union
- 5.00% APY on balances up to $1,000
- $5 minimum deposit
- No monthly fees
- For ages 20 and younger
Bethpage Federal Credit Union’s Student Savings Account is available for kids up to 20 years old, so this account can serve your child for a long time. However, digital banking is only available to children ages 13 and up.
You’ll need a minimum $5 deposit to get started and there’s a $1,000 ATM withdrawal limit which may be worth keeping in mind if your child is saving toward a big goal. Its 5.00% APY is certainly a compelling offer, but you’ll only earn this on up to a $1,000 balance. However, account holders still do earn interest on bigger balances -- between 1.39% and 5.00% on balances between $1,000 and $10,000. Even though Bethpage’s physical locations are limited to New York, you can open and manage an account digitally anywhere across the US -- just keep in mind the 13 and older limitation for digital banking.
Best for teaching financial literacy
- No minimum deposit
- No monthly fees for account holders younger than 18
- Offers interactive learning experience with Sesame Street characters
- For ages 18 and younger
PNC’s S is for Savings account sneaks on to our list due to a design that helps make learning about budgeting fun. Let’s face it: Your kid may not be all that interested to hear about your perspective about saving, but they’ll be more willing to listen to Elmo, Cookie Monster and other familiar Sesame Street characters talk about cash. You can also teach them about money management at one of PNC’s 2,600 in-person branch locations or manage the account entirely online.
There’s no minimum deposit and no monthly fee for anyone under 18 years old. However, there is one drawback: The interest rate is a paltry 0.01% for balances of at least $1.00. But that’s not too surprising since the best savings rates generally aren’t found at big banks.
Although you can technically keep this account once your child turns 19, Although you may have to pay a $5 monthly service fee if you don’t meet other minimum balance requirements. But the fee is waived for children 18 and younger.
Read our PNC Bank review.
Pros and cons of savings accounts for kids and teens
Should you open an account for your kid, or simply stash some of their money in your own account? Since your child will be in the early stage of managing their money, this decision will entail some extra work on your end and how you want to teach your child about money. You may be leaning toward giving your child more independence with their own savings account, but you also may not want to manage another account.
Here are a few pros and cons to consider before opening another account.
Kickstarts financial literacy and money management skills, including saving and goal setting
Parents can be a joint account owner for full access
Many interest-earning savings account options
FDIC or NCUA insurance to protect your funds
Usually come with no fees and low minimum balance requirements
Limited availability at major banks
Often requires a parent to have an account at the same institution
Interest potential may be lower than adult savings accounts
Some kids may no longer qualify for the accounts after a certain age
How to choose a savings account for your kid or teenager
When choosing the best savings accounts for your kid or teenager, here’s a rundown of some of the key tips to follow:
Look local: There are quite a few credit unions that offer extra perks with their savings accounts, such as bonuses for good grades, like Sky Federal Credit Union. These tend to be smaller, local financial institutions -- hence why they don’t appear on our list. But if there’s one in your town, this can be a great win-win: better academic performance and better personal finance habits.
Start with where you already bank: Many institutions require that the parent or guardian of the kids’ savings account owner also have an account at the same bank or credit union. If you don’t want to open another account elsewhere, start with where you already bank. Since accounts for grown-ups often come with fees and minimum balance requirements, be sure to think about your own financial situation, including your savings APY, minimum balance requirements and fees.
Ask about education tools: A kids savings account should offer more than a place to park their money. Evaluate the bank’s mobile app to see if it’s an easy way to talk to your child about money -- some offer financial literacy courses and games, such as PNC. If your child simply sees the savings balance, they don’t really learn much. Instead, money management guides and lessons can help them make smart budgeting decisions.
How to open a savings account for your kid
The requirements for opening a savings account for your kid vary from bank to bank. Generally, you’ll need to follow these steps:
Find the bank and account that works for you: While some online-only banks can offer higher savings rates, credit unions also have a few outstanding perks. Think about what bank services and products you’ll need alongside your kid’s savings account since some institutions may require the co-owner of the account to have an account there as well.
Gather your information: Regardless of whether you need your own account, you will need to include your personal details – including you and your child’s Social Security number – as a co-owner. The bank will also need your child’s Social Security number or a current passport, but if your child is older, you may also want to include a school ID or a driver’s license. Additionally, the bank will need other personal information, such as your physical address, phone number and email.
Complete your application for your child: Many banks and credit unions will allow you to submit your application for a kids savings account online. However, there are exceptions. Some require you and your child to visit a branch or schedule a virtual appointment to open the account.
Make an initial deposit: While plenty of kids savings accounts don’t require any minimum deposit, it’s still smart to fund the account. Be sure to ask your bank about deposit requirements such as cash, check or direct deposits. Consider arranging an automatic monthly transfer, too. For example, if your child is old enough to understand the concept of an allowance, you can also transfer money after chores are done to show them the value of work in exchange for money.
The bottom line
No matter what your kid decides to be when they grow up, there is one essential skill they will need: a solid grasp of money management. Opening a savings account for your kid gives them a chance to track their money, inch closer to savings goals and understand the impact of smart spending habits.