A kids savings account teaches your (not so) little ones how to save, and the importance of earning interest. The trick is to find an account that has few fees, a decent yield and allows an appropriate level of access based on your kiddo’s maturity.
Annual percentage yields (APYs) and account details are accurate as of August 14, 2023.
Best savings accounts for kids and teens
Compare the best savings accounts for kids and teens
* BECU Early Youth Savings Account offers 6.17% APY on balances under $500, and 0.50% APY on greater deposits.
** Spectrum Credit Union MySavings Youth Account offers 7.00% APY on balances under $1,000, and 0.75% on greater deposits.
*** Chevron Federal Credit Union MySavings Youth Account offers 7.00% APY on balances under $1,000, and 0.75% on greater deposits.
**** Spectrum Credit Union MySavings Account and Chevron FCU MySavings account require no minimum payment, but if you are not a member of the unions yet, you will have to pay either a $25 or $50 minimum deposit.
***** Alliant Credit Union Savings Account requires a $5 minimum deposit but will give you that $5 to open the account for your child.
Methodology
We looked at more than 300 savings accounts from around 150 financial institutions. Some of the institutions we analyzed included Chase, TD Bank, Wells Fargo and USAA. We scored savings accounts following the methodology below. A score of 80 to 100 earned five stars; 60 to 79 earned four stars and so on.
Fees: 40%
The last thing you want while saving for your child’s future is for fees to get in the way. We put fees as the biggest factor for this reason.
We incorporated monthly fees (10%), NSF fees (10%), overdraft fees (10%) and third party ATM fees (10%).
Minimum deposit and balance requirement: 20%
Many kids don’t have a ton of money to deposit into a bank account. Deposits and transfers are typically made by adults and, as a parent, you likely don’t want to drop a lot of money just to open a bank account. Opening deposit requirements and minimum balance requirements were weighted at 10% each.
Annual percentage yield (APY): 20%
One way to help build your child’s financial future is to find savings accounts that earn interest. The higher the APY, the more interest you earn on your savings. Because of this, we included APY as an important factor.
Digital experience: 12%
Having a good digital experience, whether that be online or mobile banking, can be pivotal. Under digital experience, we considered rankings and reviews in the Apple App Store (3%) and Google Play Store (3%), plus whether the financial institution offered online bill pay (3%) and online banking access (3%).
Customer experience: 8%
Seeing how hundreds to thousands of other parents liked (or disliked) a kids’ savings account can help you make a decision. Better Business Bureau (2%) and Trustpilot (2%) ratings were factors in our methodology. Plus, we counted live chat availability (4%) in this category as well.
Why some banks didn’t make the cut
Some banks didn’t make the cut because of factors like high maintenance fees, low APYs and strict eligibility requirements. These factors all contribute to your kid’s ability to save up for their future.
You’ll notice that many of the largest banks in the nation didn’t make our list. As they’re often top-of-mind for Americans, they tend to not offer the best deals; whereas smaller financial institutions want to make a splash and gain attention.
Why a kids’ savings account is a good idea
A kid’s savings account can help your kid get comfortable with handling money, which is vital for financial success as an adult.
“Money management isn’t learned overnight, so starting kids early in understanding savings can be the difference between them becoming self-sufficient adults or not,” said Jacqueline Schadeck, an Atlanta-based certified financial planner (CFP).
A kid’s savings account can help your child keep track of money and learn how to set it aside for financial goals, such as saving money for college or purchasing a car.
Not only will this savings account help children and teens, but it can also help parents who want to oversee their child’s account and keep up with their child’s savings and financial aspirations.
Having a kid’s savings account allows individuals to reap the benefits of earning interest. It gives families a safe way to build a financial foundation for their children and teens.
Choosing the best savings account for your kid
Once you know what features to look for, it shouldn’t be difficult to find the savings account that works for you.
No fees or minimums
Children typically don’t have a large balance to start off their savings, so fees may be especially frustrating and high minimums may prevent them from opening an account in the first place.
“It’s important to consider savings accounts that offer competitive interest rates and do not have any minimums or hidden fees,” said Brandon R. Amal, CFP and founder of Amaral Financial Planning.
High APY
Besides helping your kid to earn money, a high interest rate can be instrumental as an example in teaching your child how compound interest works; a dollar today is better than a dollar tomorrow.
“The earlier the better to discuss money to give them time to grasp this non-natural concept,” said Schadeck.
Access
Digital banking makes life easier, but you can set guardrails. And once they mature, you can let the kiddo take over.
“Parents with younger children should consider accounts with the ability to grow with their child,” said Sanya Mulhern, a CFP with the Pacific Group. “In other words, can you add a checking account later, or a debit card?”
Maybe you want to start your kid off with a savings account they can access by going into a branch and, as they grow, allow them greater access, such as helping them download the mobile app and learn how to use an ATM card.
How to open a kids’ savings account
You can apply for a kids’ savings account online or in person. To open an account, you first need to ask yourself what your kids are capable of in terms of managing money. Finding the right savings account for your child can depend on their age, the responsibilities that come with the account and what type of financial goals they may make for themselves.
Look for savings accounts with high yields and low fees. See if a bank offers benefits or special features with their kids’ savings account.
Once you choose the savings account, start the application process. Have the following ready:
- Identification documents: To open an account you’ll need forms of identification for the child and guardian. Forms of identification for minors may include a Social Security card and birth certificate, while a parent or guardian will likely be required to show a driver’s license or passport (with photo).
- Personal details: You’ll need to provide your date of birth, phone number and residential address.
- Initial deposit: If there’s a required initial deposit, have that money prepared, otherwise have whatever amount you’d like to deposit on hand or ready to transfer.
Note that some financial institutions require that you have an in-person or virtual meeting as part of the application process in order to prevent fraud.
With the application complete, you should hear back quickly on whether the account is approved and open.
Frequently asked questions (FAQs)
There isn’t a minimum age requirement on many kids’ savings accounts. You can open one whenever you want and increase how much your child interacts with it as they age. You can start explaining how saving is important when they’re very young and build up to letting them manage their own ATM card when you feel your child is ready.
To open most savings accounts, you must be 18 and older. Kids’ savings accounts almost always require a parent or guardian over the age of 18 to be a joint owner.
Taxes on a child or teens savings account depends on how much interest is generated. If your kid’s account generates more than $2,300 a year, it may be taxable. You can include it in your own tax filing up until the interest earned is greater than $11,500, at which point you have to file a separate tax form in your child’s name.
