Are you a parent and looking for the Best Savings Account For Kids With a Hassle-free procedure? You’re on the right page.
It is a good idea to teach a child or baby good money habits by opening a savings account. The topic of bank accounts may already be familiar to your child from books or television. They might also be ready for a savings account if they ask where the money comes from or how to have one.
The savings account provides a glimpse into how banks and credit unions operate and a place for your child to stash allowance and birthday money. In addition, it allows them to grow their money through interest.
We’ve compiled our recommendations for the Best Savings Account For Kids below. These institutions have stayed at the top of our picks in the last few months because they continue to stand out for their minimal bank fees and unique features.
What Are Savings Account For Kids?
- 1 What Are Savings Account For Kids?
- 2 How Do Kids Savings Accounts Work?
- 3 What Is the Right Age For Kids Savings Account?
- 4 Can My Child Open A Savings Account?
- 5 Best Savings Account For Kids
- 6 How to Open Savings Account For Kids?
- 7 Requirements For Savings Account For Kids
- 8 Required Documents For Savings Account For Kids
- 9 Types of Savings Account For Kids
- 10 Tips for Managing Your Kids Savings Account
- 11 Pros and Cons Of Savings Account For Kids
- 12 What Happens When My Child Turns 18?
- 13 FAQ
- 13.1 Which is the best Savings Account For Kids?
- 13.2 How much do you pay in taxes on your children’s savings accounts?
- 13.3 What are the benefits of opening a Savings Account For Kids?
- 13.4 Do my kids need a savings account?
- 13.5 At What Age Should a Child Have a Savings Account?
- 13.6 What is the process for opening Savings Account For Kids?
- 14 Conclusion
The purpose of a savings account for kids is to store savings for a minor who may not be old enough to open their own account. An account may hold money given to a child or earned through a job or allowance. The account could also be used for minors’ education or other necessities.
All savings account types, however, are not created equal. It’s a good idea to shop around before opening a bank account on a child’s behalf.
For example, investing in a kids’ savings account may have restrictions limiting how much money can be used. Some of them are more flexible but may not offer the same degree of security or return on investment.
How Do Kids Savings Accounts Work?
There are only a few minor differences between children’s savings accounts and adults’, aside from a few extra features aimed at helping young savers (and their parents) track their progress.
You should research the types of accounts offered by banks and credit unions beforehand – terms and conditions can differ greatly. The child may need to be present when opening an account at some financial institutions, while others do not.
What Is the Right Age For Kids Savings Account?
It is possible for you to open a savings account for kids at any age, starting from birth. If the account is meant to be used as a learning tool, wait until the child is in elementary school and understands basic money management concepts (like “needs” and “wants”).
Can My Child Open A Savings Account?
There is a good chance your child is old enough for a savings account. The parent or guardian is typically required to have joint ownership or control of a child’s savings account. In other words, until your child is ready to manage their finances, you can do so. As a result of that setup, your child will probably not need to meet a minimum account age requirement. It is even possible to open a savings account for a child.
Best Savings Account For Kids
There are several Banks that offer Savings Account For Kids, some of which are given below:
Alliant Savings Account For Kids
The credit union covers the initial $5 deposit required for the Alliant Kids Savings Account. The account does not earn interest when the daily balance falls below $100. It pays a 3.1 percent annual percentage yield. You won’t be charged a monthly fee if you receive e-statements instead of paper statements.
You and your child can monitor the account’s funds via a mobile banking app, make deposits, and check interest earned on the account. Alliant Teen Checking Accounts are available for children aged 13 and older.
This savings account offers features that will help children learn more about money because Alliant Credit Union is rated as Bankrate’s best credit union.
Capital One Savings Account For Kids
In their childhood and teenage years, your child can learn about money management and banking through Capital One accounts.
A 2.50% annual percentage yield is offered by Capital One’s Kids Savings Account. To hold onto this account, your child won’t have to pay any maintenance fees, nor is there a minimum opening deposit. Besides setting up savings goals for your children, the account also features automatic savings. The child can make regular, scheduled deposits to their account this way. Your account can even be linked to your child’s account for ease of depositing money.
The MONEY teen checking account is available to your child as early as eight years old at Capital One. Unlike a savings account, a checking account like this one teaches them how to spend and manage their money. Capital One will offer them a free debit card and access to its mobile banking app and website. This account has no fees or minimums.
Kids Savings Accounts will convert to Capital One’s standard savings option once your child turns 18. MONEY’s teen checking account has a similar setup, transitioning to 360-checking at 18. Additionally, ensure frequent conversations with your child about their financial goals to keep them on track. If you’re a grandparent, you can also include considerations for life insurance for grandchildren.
MPH Bank Savings Account For Kids
A First account from MPH Bank can be opened as early as 10 for kids who are ready to learn how to spend (and save) wisely. In addition to a debit card, kids can set up savings goals inside the app and earn interest on deposits. You can easily save when you make a purchase by using the round-up widget.
A direct deposit feature allows teens to be paid two days earlier, and there are no monthly fees. There are more than 55,000 fee-free ATMs available to kids nationwide through Allpoint. A Zelle integration facilitates easy money transfers with the First account.
PNC Bank Savings Account For Kids
While the PNC Bank’ S’ is for Savings account lacks an APY and other financial benefits, it makes up for it with financial management tools for children. The program starts with an interactive online banking program that uses Sesame Street to teach children financial lessons. There are three main financial focal points in this experience: saving, sharing, and spending.
There is no limit to how many deposits you can make with an ‘S’ for Savings account. A feature like this isn’t very common among kids’ banking accounts and allows the account to grow quickly. PNC has created the Auto Savings system so recurring deposits are made at specific times for those who may wish some help building their savings.
Opening an S is for Savings account online is free, and opening an account at a branch costs $25, making it an accessible option for just about anyone. A child under 18 will not be charged a monthly fee on the account, but after that age, the fee changes. If you’re over 18, PNC charges a $5 monthly fee unless you make automatic transfers of at least $25 per month or maintain an average balance of $300. You will not be charged $5 if you meet either of these conditions.
How to Open Savings Account For Kids?
It is easy to open an account online at most banks and credit unions, including those listed above. The following steps will be included:
You must provide your child’s social security number when opening a financial account for them, so make sure you have it on hand.
Open An Account Online
Find the “Open an Account” button or link on the institution’s website. It is important to note that you must become a member of a credit union prior to opening an account. It is usually possible to do this at the same time as opening an account.
You’ll need to provide several personal details for your child, as well as yourself since anyone who is under 18 is required to have an adult serve as their primary account holder.
Your driver’s license is likely to be required either as part of the online application process or as a follow-up step. It is possible that some institutions will require additional documentation.
The account can be funded after it has been opened by transferring money from another institution. A few days after an account is opened, you can use digital banking to link an external account. Occasionally, you can do this during the account application process, and other times, you can do it afterward.
In order to successfully manage your finances, you should set up online banking for yourself and perhaps for your children, depending on their age and their ability to interact directly with their accounts. Account opening is part of some banks’ processes, while other banks require you to do this separately, perhaps a day or two after opening the account.
Requirements For Savings Account For Kids
It isn’t too complicated to set up a Savings Account For Kids. The following conditions must be met for you to open one:
- In most cases, the opening deposit is not stringent, but you should expect to deposit between $25 and $100 to begin.
- An account with less than $20 might be charged a fee by the bank.
- Ask your lender to make sure that children’s savings accounts do not have regular maintenance fees.
Required Documents For Savings Account For Kids
You should be able to get by with one of the following:
- Social Security card
- A school ID is required
- The passport
- An official birth certificate
Types of Savings Account For Kids
It is generally possible for parents to open a bank account for their children in two ways. According to your tax situation and your intentions, you’ll pick one of the following options.
You and your child can deposit and withdraw funds from a savings account just like you would with a conventional bank account. The account is entirely under the control of the parents, so children can’t access funds without their parents’ permission. The interest rate on kids’ savings accounts often incentivizes them to keep their balances as high as possible. Children are also provided with debit cards and online banking through many savings accounts.
There is no daily or weekly usage of custodial accounts, also known as Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts. The account cannot be accessed by children under 18 years of age. Savings accounts do not have tax implications due to this dynamic. Therefore, custodial accounts can’t be used in the same way as savings accounts, and you should only open one if you intend to use it for something specific.
Tips for Managing Your Kids Savings Account
You can help your child develop positive money habits by following these tips.
It is important to encourage your child to set short-term and long-term savings goals. Savings plans will be more likely to succeed if they are motivated to stick to them.
Review Your Account
Discuss your child’s progress with him or her, monitor their account balance, and offer guidance.
Provide Budgeting Instruction
You can teach your child basic budgeting skills by allocating a portion of their savings to spending, saving, and charitable giving. Provide them with information about emergency funds and how to balance their financial obligations.
Educate your child about financial literacy with online resources provided by the FDIC and trusted news sources (such as this one).
Pros and Cons Of Savings Account For Kids
- Kids can benefit from these accounts by learning the importance of saving, budgeting, and making wise financial decisions.
- A savings account allows children to set financial goals, such as saving for a toy or a special event – all while instilling discipline and accountability.
- Children can learn about compound interest by watching their money grow in a savings account, which accrues interest over time.
- Kids can monitor their savings and make deposits and withdrawals under the supervision of their parents in most cases when they can access their savings accounts online.
- There are some financial institutions that require savers to make a minimum initial deposit or maintain a certain balance.
- In custodial accounts, parents approve or confirm transactions, which limits the amount of money a child can access.
- There are some accounts that charge fees. Ensure that you carefully review the fee structure of every potential account before signing up.
What Happens When My Child Turns 18?
After your child turns 18, your bank will convert the account into a traditional adult savings account. You may be charged a fee or be required to sign documents by some banks when your child’s birthday rolls around. Your child and you may want to discuss whether the account should be managed independently or jointly.
As your child turns 18, he or she becomes eligible for financial services such as credit cards and loans. The more guidance you give them and the experience they gain with their bank account, the better they will understand debt, interest, and budgeting. You should have frequent conversations with your child about their financial goals to keep them on track.
Which is the best Savings Account For Kids?
It depends on your personal preferences and needs. When researching contenders, consider interest rates, fees, minimum balances, and account accessibility.
How much do you pay in taxes on your children’s savings accounts?
You can expect your bank to issue you a Form 1099-INT at the end of the year if your child earns interest on his or her savings account. If you have to declare that interest as income on your tax return, it will be included as taxable income.
What are the benefits of opening a Savings Account For Kids?
The savings account for kids is a safe, secure way to save money and reach their goals. The money they save will be protected as long as the account is opened at a bank that is FDIC-insured. Kids can also learn a little about how banking works by having a savings account and the importance of setting money aside regularly.
Do my kids need a savings account?
In order for children to become more financially literate, a savings account can be beneficial. The right money habits can be built in children through gradual savings. This helps them to understand the importance of saving and the value of money, as well as build the right money habits.
At What Age Should a Child Have a Savings Account?
Savings accounts for kids should be opened at a young age based on their circumstances. It is common for parents to set up a savings account for their infants and toddlers so that they can contribute regularly to the account or deposit gift money they receive.
A great time for parents to start is when their tweens are in their twenties (around 10-12 years old) since the child is old enough to learn about banking and has some income to deposit or may want to start spending their own money.
What is the process for opening Savings Account For Kids?
Online applications are usually available for savings account for kids. The only information you’ll need to provide is some basic information about yourself and your child. Your account will be activated once you have made your first deposit.
You can pass on your financial wisdom to a young person in your life by opening first savings account for kids. It may also help kids establish positive financial habits if you invite them to help with the account. Kids can use Synchrony Bank’s high-yield savings accounts, CDs, or money market accounts to grow short- and long-term savings.