It’s never too early to start teaching your child the value of money, or how to prepare for future financial success.
“Saving, spending, and investing — you want them to have a healthy relationship with each one,” says Rita-Soledad Fernandez Paulino, creator of Wealth Para Todos.
Just as choosing the best savings account for yourself can help make it easier to save and earn some interest along the way, savings accounts designed for kids may come with some major money management perks.
The right savings account offers your child the opportunity to start setting financial goals, whether a new toy or a trip to Disney World, and practicing the habit of putting away money over time to reach it.
And with interest rates back on the rise from pandemic lows — and banks raising APYs on savings accounts accordingly — now could be a good time to open an account for your kid. Plus, it’s an opportunity to set financial goals and practice the habit of putting money away over time to reach them.
Here are our picks for the best savings accounts for kids right now, and more ways you can help your child start saving today.
Best Savings Accounts for Kids
When choosing a savings account for your child, consider the features that will simplify the saving process and help you provide some personal financial lessons along the way.
You’ll want to know details like how you plan to deposit the money and the financial goal your child has for their savings, says Andrea Woroch, a consumer finance expert.
The best savings accounts for kids come with kid-friendly features for learning, as well as easy access for parents to contribute and withdraw funds with their children with no strings attached.
Alliant Kids Saving Account: Good for Younger Children
Alliant Credit Union offers a kids savings account for children 12 and younger (if your child is 13 or older, you can open a regular high yield savings account for them with Alliant). You can earn 0.75% APY, but must have an average daily balance of $100 or more. Alliant also offers mobile banking for you to transfer money from your account to your kid’s savings account.
There is a $5 minimum initial deposit, but it is covered by Alliant when you open the account. You’ll also need to go to your online account and opt out of automatic paper statements when you open the account, so you’re not charged the $1 paper statement fee. There are no other monthly fees and no minimum balance limit (beyond the $100 minimum to earn interest).
Parents can have joint ownership, but the parent and child must both be Alliant members. There are certain employment and location requirements to become a member, but Alliant also offers the option to join if you become a member of its partner charitable organization, Foster Care to Success.
Capital One Kids Savings Account: Good for Parent-Friendly Account Features
Capital One’s regular high yield savings account is already among our favorite high yield savings accounts available today. The bank’s kids savings account comes with a 0.30% APY and a few additional features we like.
If your kid earns an allowance, you can schedule it to land in their savings account from your linked bank account in regular increments. Capital One also offers online banking and in-person transactions at Capital One branches. After your child turns 18, the account will automatically be upgraded to a 360 Savings Account, Capital One’s standard high yield savings option.
The kid’s savings account account doesn’t charge any monthly maintenance fees, and there’s no minimum balance or deposit. Only a parent or legal guardian may open a Capital One kid’s savings account for children under 12. And while kids can log in and view their account at any time, only a parent can move money in or out.
First Internet Bank Tomorrow’s Tycoon Account: Good for a Larger Opening Deposit
First Internet Bank’s Tomorrow’s Tycoon account for kids does require a $100 minimum deposit. But after that initial requirement, there are no monthly maintenance fees or a minimum balance required to avoid fees. Plus, the account earns 0.25% APY. Your child will be allowed six transactions per month, but unlimited deposits.
When your child turns 18, their account will transfer to a Free Savings account with First Internet Bank, the bank’s standard high yield savings account option.
Best Savings Accounts for Kids Summary
|Minimum Deposit||Monthly Fees||APY|
|Alliant||$5 (Paid by Alliant if you’re a member)||$0 when you opt out of paper account statements||0.75%|
|First Internet Bank||$100||$0||0.25%|
How We Chose These Banks
We narrowed down the best options for kids’ savings account based on a few criteria, including type of bank, availability, deposit and balance requirements, other features, and fees.
We started by compiling a list based on the 25 largest commercial banks according to the Federal Reserve, banks on our overall list of best savings accounts, and other commonly reviewed and searched-for online and traditional banks.
To narrow down our top picks, we focused on banks that offered savings accounts specifically for kids, instead of custodial accounts designed for financial gifts or accounts that allow children to be added to their parent’s accounts, to make sure that our picks were tailored to kids and financial literacy. We eliminated banks that have strict eligibility requirements or location restrictions that disqualify a large number of people.
We only included accounts with minimum deposit requirements of $100 or less, and none of the accounts on our list charge monthly service or maintenance fees. We also value transparency, so we eliminated any banks that don’t make rates and fees easy to find on their websites. We didn’t set a minimum threshold for the annual percentage yield, but an account with a competitive interest rate can be a great way to help your kids grow their savings over time.
Lastly, we made sure each financial institution is FDIC- or NCUA-insured to make sure your child’s money is secure.
Why Open a Savings Account for Your Kid?
Opening a savings account with your child is a step toward helping them become financially savvy, Woroch says, “whether it’s putting money away or withdrawing money to pay for certain purchases they want to make. Developing the habit of saving early is a great way to set your child up to continue saving as an adult.”
And you can start small: talk to your child about their goals, and encourage them to think of something they want to save for. Then, whenever your kid receives money for a birthday or holiday, they can deposit it into a savings account and see their balance begin to grow over time. Or if you give them a regular allowance, you can determine together a percentage to set aside into savings.
Another good reason to open a savings account instead of putting money away in a piggy bank is the opportunity to earn interest. Choosing a high yield savings account with an online bank can help you earn more interest than a traditional savings account.
For example, if your child deposits $1,000 into a savings account with a 0.30% interest rate today, they can earn $3, raising their balance to $1,003 within a year. Even though the interest may not seem like much initially, even small amounts can add up over time.
Choosing the Right Savings Account for Your Child
The right savings account for your child can depend on a number of factors, including their age, the perks and features that can help them learn, and how they plan to use the money in the future. Here are a few things to look for:
- Any minimum deposit requirement
- Minimum balance requirements
- Whether the account charges monthly fees
- The account’s APY
- FDIC- or NCUA-insured bank or credit union
Woroch recommends staying away from savings accounts that require a big minimum deposit. If your child is just getting started with money from their birthday or an allowance, they may not have the funds required for an account with a high minimum.
More factors to keep in mind include additional fees, number of withdrawals and deposits allowed monthly, and how your child can or cannot access the money themselves. You’ll also want to know exactly how much access you’ll have to the account as parent or guardian and how easy it is for you or your child to make transfers — will you have ATM access, transact primarily online, or have the option to go into a bank branch?
Don’t forget to also consider other perks or kid-friendly features. Some banks may allow you to deposit a weekly or monthly allowance directly into the savings account, for example, and others have saving trackers to show your child how much they’re saving over time.
Once you’ve narrowed down an account that works best for you and your child, ask your bank about options that may be available for when your child ages out of their kid savings account. Some banks may allow you to keep the account but make more options available after a certain age, like a checking account. Others may upgrade the kid’s account to a regular high-yield savings account, or a combination of both.
Before opening your child’s savings account, pay attention to any minimum balance requirements or monthly fees that can offset the account balance. There are many banks that don’t have these requirements, which can make it less costly to manage the account over time.
More Options for Kids Savings Accounts
Check Your Local Bank or Credit Union
The kids savings account options on our list are all widely available and accessible for a wide range of readers, which is why we didn’t include accounts from credit unions restricted by employment or location or regional and local banks that may require in-person sign-ups.
However, if you qualify, these institutions also have competitive options for kids. Some credit unions offer kids savings accounts with low or no minimum balance requirements, high APYs, and kid-friendly money management features compared to other banking options.
For example, BECU has a great Early Saver account for kids that offers a very high 4.07% APY on the first $500, then 0.02% APY. There are no monthly service fees and no minimum balance. However, you must be a member of the credit union to open an account, and membership is largely restricted to residents of Washington state and surrounding areas.
Keep in mind that your local bank or credit union may only have a few branch locations, and it may lack a few features such as a mobile app.
Open a Regular Savings Account
Another option to consider as a parent saving for your child is opening a regular high-yield savings account yourself, but keeping the balance designated for your kid. You may be the only one able to contribute to the account, but you can get creative on how you use it as a personal finance tool to teach your kids about setting goals.
For example, you may choose to add only the money your child decides to put away from their own allowance or gifted cash. Or you can use the account to contribute your own savings balance for your child’s future — or a combination of both.
High yield savings accounts with online banks will also help you score among the highest yields available today, with many offering more than 10x the national average. Like with an account designed for kids, look for details like minimum deposit or balance requirements, fees, and mobile account access.
How to Contribute to a Kid’s Savings Account
Before you open a savings account for your kid, it can be helpful to develop a plan for how you, your child, and possibly other adults in their life plan to contribute to the account. Here are a few options:
Contributions Made by Kids
A savings account is a good way to teach your kids about setting aside money for a future purchase. If you give them a regular allowance, or they receive monetary gifts from relatives, they can start a habit of savings at least a portion of that money for longer-term goals.
Look for a bank that offers various options and flexibility for your child to contribute money, such as nearby ATMs, branches, or online banking for them to easily deposit checks or cash they get.
If your kids are older or already have a savings account, consider another savings option, such as a CD, money market account, or building an investment portfolio. The right type of account will depend on your goal, how long until your child plans to use the money, and other banking requirements for minors.
Contributions Made by Parents
There’s nothing wrong with making contributions to boost your kid’s savings balance, but first, it’s important to make sure you’re building financial security for yourself, says Paulino. You should have an emergency fund, a plan to pay off any existing debt, and already investing be toward retirement before you begin contributing extra funds.
“A lot of times, as parents, we want to give our kids everything we didn’t have,” Paulino says. “But we forget how financial security gives parents the freedom to be present with their children.”
And if you have a more specific or long-term goal for the money you set aside for your child, consider whether a savings account is the best place for it. For instance, if you’re saving for college tuition, you may choose a 529 account or a Roth IRA to earn a bigger return long-term.
Some banks offer custodial accounts to help parents and other family members build savings for their children. Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) are both common ways to identify custodial accounts that you or family members may choose to gift your kids.
You can get the account in your child’s name, and manage it as their parent until they’re an adult. But if you’re using a savings account as a way to teach your child about personal finance and building a savings habit, this type of account may not be best. Your child won’t actually be able to access it until they’re 18 or 21, depending on the bank.
Kids Savings Account Access
Your child’s access to their savings account will depend on the bank and their age.
Some banks only allow kids to view their accounts and account balance, without any ability to move money in or out. On the other hand, some banks will allow children to deposit money, but not withdraw. If your child can withdraw money, the bank may let you set a requirement on how much money can be taken out.
An account with some withdrawal and transfer restrictions can give your child more boundaries as they learn how to manage money without being the only one in charge of where the money goes. But as a parent, you should have full access, too.
Most savings accounts for kids are linked to your account to track account activity. If your bank has online banking, you may be able to receive alerts to know if your child makes a transfer. Check the terms of the account before opening to determine what access and limitations you may have.
Do You Pay Taxes on Kids Savings Accounts?
According to the IRS, the interest your child earns on a savings account may be considered taxable income. Generally, this applies if their account interest or other unearned income exceeds $2,200 and they are under 18. If the only income your child earns is interest and dividends and it equals less than $11,000, you may be able to report it on your own tax return instead of filing a separate one for your child.
Look for a Form 1099 from your bank at the start of tax season for details on how much interest your child’s account earned over the previous tax year.
Depending on your individual financial situation, other income or age requirements can affect how you report taxes for your child. If you’re unsure, ask your tax preparer and keep track of any documentation in the meantime. They will also be able to determine whether you should list the account on your own tax return or file a separate return for your child.
Choosing the Right Type of Bank for Saving
Credit unions, traditional and online banks all offer savings accounts for kids. Depending on your goals, one may be a better option for you over another.
If your child is primarily depositing their own money into their savings account, you may choose a bank with a nearby brick-and-mortar branch if you want them to handle their transactions in person, Paulino says. Keep in mind that large, national banks with many locations generally offer traditional savings accounts, which earn much lower interest on your balance.
“But don’t just go with the big [banks], that you’re used to,” says Woroch. There are plenty of other options that may offer more robut features and higher APYs than a brick-and-mortar bank.
Credit unions are a good option because they have fewer fees, Paulino says. And sometimes, credit unions can offer better interest rates compared to larger, well-known banks. Check with credit unions and local banks in your area that you may qualify for to see what options are available to you and your family.
Online banks are another option, and typically offer the highest interest rates. Just remember, your child’s transfers and withdrawals will happen via a mobile app or the bank’s website. Some online banks do offer ATM access to make it easier to transfer cash to your savings account.
Regardless of which type of bank you choose, remember to keep your child’s savings goals and money management top of mind. Ultimately, the most important thing is to start savings and instilling the good habits that your child can use to save, invest, and spend money as an adult.