How to open a children’s savings account
A savings account is a useful tool for teaching children the value of money and managing finances. But before you open a savings account for your child, it’s worth researching some key features.
Here are some of the best savings accounts for kids, including ones that require no minimum balance, charge no fees or offer ways to eliminate them, and offer competitive APYs.
Best savings accounts for kids
Some of the best bank accounts available for kids include:
Each of these savings accounts provides an exciting place to start a child’s banking journey.
The best savings accounts for kids
Alliant Children’s Savings Account
The Alliant Kids savings account requires an initial deposit of $5, which the credit union will cover for you. The account pays an annual percentage return of 0.55%, but it earns no interest if the daily balance falls below $100. No monthly fees are charged as long as you receive electronic statements instead of paper statements.
The account offers a mobile banking app that will allow you and your child to digitally monitor funds in the account, as well as make deposits and check earned interest. Children 12 and older can apply for a Teen Chequing Account with Alliant to continue their financial journey.
Alliant Credit Union is rated the best credit union by Bankrate, so it’s no surprise that this savings account offers some handy features that will help kids learn about money.
Capital One Children’s Savings Account
The Capital One Kids Savings Account charges no fees, has no account minimum and pays 0.3% APY on any balance.
Beyond a relatively competitive APY, the account offers a mobile app that allows children to check account balances, but the dual access account requires adult supervision to transfer funds out of the account. Capital One was ranked the best large bank by Bankrate.
The ‘S’ in PNC is for savings
The “S” for Savings Account offered by PNC is designed to help young children learn about money and banking. The account’s online financial education tools are robust and feature your child’s favorite Sesame Street characters.
Children can access the account through the PNC Mobile 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 account requires a minimum deposit of $25 to open and charges a monthly fee of $5 which can be waived if:
- The account holder is under 18 years old.
- An average monthly balance of at least $300 is maintained.
- There is at least one automated transfer of $25 or more each statement period from a PNC current account.
One drawback: the APY offered is very low, at only 0.01%. With that in mind, the account is probably best for young 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 with concepts, such as what’s the point, even if they don’t gain much from it.
Boeing Employees Credit Union Advance Savings Account
Boeing Employees Credit Union offers a BECU Early Saver account with no monthly fees or minimum opening balance. As kids save, they earn an extremely competitive 2.02% APY on the first $500, while higher amounts only earn 0.02% APY, comparable to rates offered by savings accounts. traditional bank savings.
Although the credit union was founded for Boeing employees, BECU has since expanded to offer membership to anyone who lives or owns a business in Washington State as well as select counties in surrounding states or is affiliated with certain organizations. The geographic limitation means the account isn’t available everywhere and may not be a viable option for those who live outside of its service area and have no connection to Boeing.
Pen Air Federal Credit Union Level Up Youth Account
Pen Air Federal Credit Union offers the Level UP Youth Savings Account which pays 0.3% APY on all balances. Accounts can be opened at a Pen Air branch in Northwest Florida or South Alabama, but can also be opened online, provided one of these membership criteria is met:
- Active duty or retired military.
- Public service employee.
- Work for a group of partner employers.
- Immediate family members of those qualified for membership.
Why should my child have a savings account?
A savings account is a useful tool to help children acquire financial knowledge. By slowly building up savings during childhood, children can develop good financial habits, learn the importance of saving, and understand the value of money.
How to open a child savings account?
In most cases, you can apply for a children’s savings account online. You will only need to provide some basic information about yourself and your child. If you are approved, you can make your first deposit and start using your account.
Do you have to pay taxes on children’s savings accounts?
If your child’s unearned income (including investments and interest) is $1,100 or less for the year, you do not have to pay tax. If it’s $1,100 to $2,200, the income is taxed at your child’s tax rate (which is often zero). Any amount over $2,200 is taxed at the parents’ tax rate, unless the child’s tax rate is higher.