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 his or her 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:
- Alliant Kids Savings Account
- Capital One Kids Savings Account
- PNC’s ‘S’ is for Savings
- BECU Early Savers Account
- Pen Air Federal Credit Union
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 currently 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 a mobile banking app that will allow you and your child to digitally monitor the account’s funds, as well as make deposits and review how much interest she has earned. When your child turns 13, she will be able to apply for a teen checking account with Alliant. With that, your child will be able to continue 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 competitive 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.
This account works well 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 designed 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 online banking. 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 who 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 his younger days.
BECU Early Savers Account
BECU (Boeing Employees Credit Union) offers an attractive account for kids. The BECU Early Savers Account, the name of the account, has no monthly fees to worry about. Plus, there is no minimum opening balance to consider. As your child saves in this account, she will earn a extremely competitive APY of 2.02 percent for the first $500. If your child saves more than $500, the rate drops and she will only earn 0.02 percent APY.
Although the credit union was originally founded for Boeing employees, BECU has since expanded to offer membership to anyone that lives and works in the state of Washington — plus select counties of the surrounding states.
Of course, the obvious drawback is that this account isn’t available everywhere. So it won’t be a viable option unless you live within the geographic territory of this credit union or are connected to the Boeing company in some way.
Pen Air Federal Credit Union Level Up Youth Account
Pen Air Federal Credit Union offers the Level UP Youth Savings Account. With this account, your young saver can earn 0.4 percent APY on all balances. Beyond the attractive APY, the Level UP account offers saving bonuses along the way. Here’s what your child can earn while building their savings:
- $10 bonus when you open the account with the $25 minimum deposit
- $20 bonus when the account balance reaches $250
- $30 bonus when the account balance reaches $500
The physical branch locations of this credit union are concentrated in North Florida and South Alabama. But you can sign up from anywhere and manage the account through the website or mobile app. To join the credit union, however, you’ll need to be:
- Active duty or retired military
- Civil service employee
- Working for a partnering employer group
- An immediate family member of someone who qualifies through a condition above
The bonus structure of this account is the most exciting part. With the promise of regular bonus cash, your child may be more motivated to boost his or her savings — and start the habit of saving early.
Why your kid should have a savings account
A savings account is a useful tool to help your child build his or her financial knowledge. Although your child might not have a stash of cash to tuck away, slowly building savings through childhood can help your child build the right money habits.
As an educational tool, a savings account can teach your children about the importance of saving, the value of money and how interest works.
Keep your child involved in the process of building their savings over time. You can take things to the next level by helping your child set and reach savings goals that interest him or her.
Each of these accounts is specifically designed to help your child learn more about money and start saving. The goal is to help children learn about their financial responsibility and have their own bank account to manage.
As you seek out the best account for your children, 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.
Source: Bankrate / Image by freepik