Teaching children about money at a young age is a valuable life lesson that will benefit them in the long run. One way to do this is by opening a savings account for your child, allowing them to learn the value of saving and managing money responsibly. Not only does this instill discipline, but it also introduces them to the concept of compound interest. To help you get started, here are some of the best savings accounts for kids.
Capital One Kid’s Savings Account
- Best for: Convenience
- APY: 2.50% APY
- Monthly fee: $0
- Age requirements: Under 18
- Parent account: Can be at any bank
The Capital One Kid’s Savings Account is a great choice as it offers a high-interest rate of 2.50% APY with no minimum deposit requirement or monthly fees. Children of any age can open this account, but those under 18 must have an adult co-owner. The account can be linked to a checking account from any bank, providing added convenience for parents and children alike.
First Tech Credit Union Start-Up Savings
- Best for: High interest rate
- APY: up to 4.00% APY
- Monthly fee: $0
- Age requirements: Under 18
- Parent account: Must be at First Tech
This account offers an impressive interest rate of up to 4.00% APY on balances up to $1,000. Beyond this limit, the interest rate adjusts to 0.05% APY. While limited to members of select tech partner companies, purchasing a membership to associated organizations makes this account accessible to all. The account automatically converts to a standard account once the child turns 18.
Alliant Kids Savings Account
- Best for: ATM access
- APY: up to 3.10% APY
- Monthly fee: $0 (with e-statements)
- Age requirements: Under 13
- Parent account: Must be at Alliant
Alliant Kids Savings Account offers an attractive APY of up to 3.10% with a modest $5 minimum deposit requirement. The child receives a $5 opening bonus, making it easy to get started. With an ATM card and no monthly fees, this account provides children with easy access to their funds while promoting saving habits from a young age.
PNC S is for Savings Account
- Best for: Educational materials
- APY: 0.01% APY
- Monthly fee: $0
- Age requirements: Under 18
- Parent account: Must be at PNC
While the interest rate for this account is low, the educational materials provided by PNC are unmatched. Developed in partnership with Sesame Street, the financial curriculum engages children in learning about money management. The account also includes interactive features like categorizing money into spending, saving, and sharing jars. Despite the low APY, the educational value of this account is invaluable.
Should You Open a Joint Account or a Custodial Account?
When opening a savings account for your child, you’ll need to decide between a joint account or a custodial account. A joint account provides equal access to the funds for both you and your child, while a custodial account restricts access until the child turns 18. Both options have their pros and cons, so it’s essential to consider which aligns best with your child’s needs and your financial goals.
What to Look for in a Bank Account for Kids
- No fees: Ensure the account has no monthly fees or minimum balance requirements.
- Educational material: Look for accounts that offer financial literacy resources.
- Easy access: Choose an account that is easy for both you and your child to manage.
- Decent interest rate: While not a top priority, a good interest rate can help teach children the concept of saving and earning money.
What Do You Need to Open a Child’s Bank Account?
- Your driver’s license or state-issued ID
- Your Social Security number
- Child’s Social Security number
- Child’s birth certificate
Most banks have similar documentation requirements for opening a child’s bank account, whether done in person or online.
What Happens to a Child’s Bank Account When They Turn 18?
Accounts designed for teens typically convert to adult accounts once the child turns 18. However, automatic conversion doesn’t always occur, so be sure to check with your bank. It’s essential to be aware of the account status to avoid any fees or penalties associated with the account when your child reaches adulthood.
In conclusion, choosing the right bank account for your child is crucial in teaching them valuable financial lessons. By providing them with the tools and resources to manage their money responsibly, you set them up for a successful financial future. Opening a savings account for your child not only teaches them about saving and earning money but also promotes healthy financial habits that will benefit them for years to come.
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