A savings account can be a great tool to teach your child about money.
“Starting the savings process for children is an effortless way to set them up for success when they are older,” says Todd Tharp, chief financial officer at USE Credit Union. “Children begin comprehending the concept of money from a very early age, and it’s a wise decision to educate them about financial responsibility as soon as possible.”
Before opening a savings account for your child, it’s important to consider your options carefully and seek out some key features. You’ll want the account to have a low — or zero — minimum balance since your child is building their savings from scratch. And you’ll want the account to have no fees or low fees to maximize your child’s savings.
Let’s take a closer look at the best savings accounts for kids.
Here are the best savings accounts for kids:
Some of the top bank accounts available for kids include:
Each of these savings accounts offers a worthwhile place to start your child’s banking journey.
Top savings accounts for kids
Now, let’s take a closer look at the details that make these accounts great for kids.
Alliant Kids Savings Account
The Alliant Kids Savings Account offers an annual percentage yield of 0.75 percent. The account requires an initial deposit of $5, but Alliant covers this upfront cost for you.
It’s important to note that your child will not earn any interest on the account until it reaches a $100 balance. But your child won’t have to worry about monthly fees if he or she chooses to receive e-statements instead of paper statements.
The account offers an online banking app that will allow you and your child to digitally monitor their funds, as well as make deposits, track their balance and review how much interest they’ve earned. When your child turns 13, he or she will be able to apply for a teen checking account with Alliant. With that, your child will be able to continue his or her journey to financial success.
Overall, Alliant Credit Union is a great financial institution. In fact, it is the best credit union out there, according to Bankrate. So it’s no surprise that this savings account offers practical features that will help your child learn more about money. This account could be helpful for children of all ages. The features are robust and you can choose to use the features that are best suited to your child’s learning level.
Capital One Kids Savings Account
The Capital One Kids Savings Account offers a fee-free experience to help kids start off their banking journey right. The account has no account minimum and you’ll enjoy a 0.5 percent APY on any balance held in the account. That means that your child can start to understand how interest earned on his savings can boost his account balance no matter how much or how little money he holds in his account.
Beyond a relatively high APY, the banking app offered through this account is very helpful. Your child will be able to log into the app at any time to check his balance. But your kid will need your help to transfer funds out of the account.
Capital One is an easy bank to work with due to its online accessibility in addition to offering some branches. As the best big bank to work with, according to Bankrate, your child should have a great first experience with this bank.
This account is great for kids that are ready and willing to check their account on a regular basis. They will get in the habit of keeping tabs on their spending and saving options. But since the account has “dual access,” you’ll still have the final say on whether or not money will be transferred in or out of the account.
PNC’s ‘S’ is for Savings
The ‘S’ is for Savings account offered by PNC is geared to help younger children learn about money and the banking process. The standout feature of this account is the online financial education tools that come with it. You’ll find a robust collection of learning tools that feature your child’s favorite Sesame Street characters.
With the account, your child will have access to an online banking app. The goal of the app is to provide an interactive banking experience that teaches your child more about “saving, sharing, and spending,” the bank says.
In order to open the account, however, your child will need to deposit at least $25. Although there is a $5 monthly service fee, it can be waived if the account holder is younger than 18, has an average monthly balance of $300, or has a monthly auto savings transfer of at least $25 from a PNC checking account. The APY of this account is very low, at only 0.01 percent. But the educational tools offered might be worth the tradeoff of higher APYs available at other banks.
This account is likely best for younger children that have a lot to learn about the basics of money. With the help of fun characters, they’ll be more likely to engage in concepts, such as what interest is. But an older child might not be open to connecting with the characters of their younger days.
The bottom line
Each of these accounts is specifically designed to help your child learn more about money and start saving. The goal is to help them learn about their financial responsibility and have their own bank account to manage.
As you seek out the best account for your child, consider their age and maturity level. A four-year-old will likely need a different set up than a ten-year-old. Keep that in mind as you explore savings account options. You want the account to provide an engaging experience for their age with their specific needs in mind.
If you want to expand their learning opportunities beyond the savings account itself, then you have many options to consider. There are several apps that are designed to help your child grasp basic money concepts in a fun way. For example, Bankaroo, RoosterMoney, and Savings Spree are all engaging apps that could help your child learn more about money.
Featured image by Prostock-studio of Shutterstock.