If your children get an allowance, or you want to start saving money for your kid’s college, it is beneficial to open tailored online savings accounts for kids. Fortunately, many famous financial institutions offer banking services and other savings solutions tailored to kids and parents.
Opening a bank account early can also lead your child toward financial success, whatever your reason may be.
Savings Accounts for Kids
A child can have a joint account with their parent at any age. Once the child is 12 or 13 years old, they can also open a joint checking account. Parents can monitor both accounts until the child is a legal adult. After that, you can choose to go into a branch or use a digital solution to open an online savings account for your kid.
What Are The Benefits of An Online Savings Account for Kids?
The biggest perk of a children’s savings account is teaching your child responsible money management. It encourages them to save up for toys, video games, and fun outings. A bank account is also safer for a child to store their allowance. Kids might misplace a piggy bank or lockbox, which can also be stolen.
Saving up for their goals also instills confidence in your child. It’s a great feeling to be able to pay for something yourself with the money you’ve saved over months and years. Creating that positive association early on encourages your child to be frugal for the rest of their lives. They’ll be more inclined to save up for larger purchases, like their first car.
Having a bank account of their own will also broaden your child’s vocabulary and knowledge of the financial industry. Many adults accrue poor credit early in life because they were never taught to spend money wisely. Your child will have a head start learning all the ins and outs of financial stability with their first savings account.
You’ll be able to closely monitor your child’s activity on their savings and checking accounts. Overdraft your account can happen even with careful financial planning, especially in emergencies. If this happens to your child, take it as a learning experience. You can give them helpful tips on preventing overdrafts and late fees in the future.
Suppose you are looking into saving money for your kids’ education. In that case, you may want to consider other solutions rather than online savings account for kids to take advantage of extra features and benefits.
How Do You Choose the Right Kids Saving Account?
When searching for the right savings account for your children, keep the following factors in mind:
1. The Purpose of the Account
Think about what you want to save for with savings account for your kids. If you teach them financial responsibility and how to save money, you may want to look at opening online savings accounts for kids. However, if you want to save money for their future education, a tax-advantaged investment account for kids may be a better solution with better financial benefits.
2. The Interest Rate
Interest is the amount of money your child will receive from the bank just from having an open savings account. This can also incentivize your child to increase their savings, allowing them to reach their goals sooner. Interest rates are usually dependent on the current economy and differ between banks.
3. The Fees
Some children’s savings accounts will have hidden overdraft fees, maintenance, debit card replacements, or inactivity. Ideally, your child should have a bank account with as little of these extra fees as possible.
4. The Minimum Balance
Some banks require users to keep a minimum balance in their accounts to avoid hidden fees, even for children. Fortunately, many banks will immediately repay this fee or hold it until the child turns 18. Finding a children’s savings account with no minimum balance is also possible.
5. The APY
APY, or annual percentage yield, is the total of a kid’s savings account interest rate and compounding interest. As with interest rates, this figure will vary between different banks, and you want to choose a higher one to make the most of the savings.
Popular Long-Term Online Savings Accounts For Kids
If you decide to allow your children to save money that will not go towards their education, you may want to review some of these options:
- The Capital One Kids Savings Account has no maintenance fees, is free to open, and has a competitive APY. You can also use the Automatic Savings Plan feature to transfer money from your balance directly into your child’s account. Kids can check their balance and upload checks in their name at any time with the Capital One app. The Teen checking account also comes with a fee-free debit card. However, this account requires many parental permissions for essential functions, like transferring money between accounts.
- The BECU Early Savings Account has no minimum balance fee and a higher APY if your child exceeds a certain minimum balance. A free checking account is also available when the child turns 18, and both accounts have no monthly fees.
- The Alliant Kid Savings Account features a convenient online app and a good APY that requires your kid to keep a minimum average monthly balance to earn interest. Alliant charges some fees for the initial deposit, paper bank statements, account inactivity, or insufficient funds. Fortunately, you can opt for digital bank statements to avoid the paper statement fee, and Alliant repays the initial deposit fee.
- PNC’s ‘S’ is for Savings account, where PNC partnered with Sesame Street to craft exclusive, engaging financial lessons for young children who use this account. Your kids can start earning interest on the money immediately as long there is some money in the account. You will need a small deposit to open the account and a small monthly maintenance fee that can be waived by keeping a certain average monthly balance in the savings account.
