Opening a savings account for a child or teenager is a fantastic way to introduce them to the world of saving and setting financial goals. While your current bank may seem like the obvious choice, it’s worth expanding your search to find the best savings accounts for kids. These accounts, offered by online banks and credit unions, typically come with competitive interest rates and minimal fees. Let’s explore the top options for helping your child grow their money in 2024.
Best Savings Accounts for Children and Teens Compared
Here are the leading savings accounts for children and teens in 2024:
- Account 1
- Account 2
- Account 3
- Account 4
- Account 5
Open a Savings Account for Your Child
Ready to get your child started on their savings journey? Opening a savings account for them is easier than you might think. Simply follow these steps:
- Step 1
- Step 2
- Step 3
- Step 4
Our Recommendations for Best Savings Accounts for Kids
Best for Flexible Interest: GoHenry
GoHenry is a debit card designed for kids and teens, offering parents the ability to fund interest on savings goals. You can set the annual percentage yield (APY) anywhere from 5% to even higher. As your child makes deposits to their savings goals, their balance will earn interest at the set rate. While GoHenry is not free, the monthly fee is only $4.99 per child or $9.98 for up to four children (third and fourth kids are free). Plus, there are no extra costs for ATM withdrawals.
Best for High-Interest Savings: Step
Step is a digital banking platform designed to empower teens with spending, saving, and credit-building capabilities. By opening a Step account, your child can earn a competitive APY on their savings balances, comparable to rates offered by online banks. They can also benefit from the round-up feature, which automatically saves the difference when they make debit card transactions.
Best for Savings Rewards: Copper
Copper is a debit card tailored for kids and teens aged 6 to 18, offering built-in features to simplify saving. With Savings Rewards, children can earn up to 5% as they work towards their savings goals. Copper also provides an automatic round-up feature, helping kids save every time they use their debit card. Older teens can benefit from the Divvy feature, which automatically saves a percentage of their income towards their long-term objectives. There are no monthly fees, but a fee applies for reloading the teen’s debit card at Green Dot locations.
Best for Credit Union Savings: Alliant
Alliant is an excellent choice if you’re considering a credit union savings account for your child. Their kids’ savings accounts offer a competitive APY, surpassing traditional banks’ rates. Alliant covers the initial $5 deposit, and there are no monthly maintenance fees if you enroll in e-statements. The account comes with an ATM card, allowing kids to conveniently deposit checks or cash, as well as make withdrawals. If you’re interested, Alliant also provides a teen checking option for older kids.
Best for Saving Toward Multiple Goals: Capital One 360
Capital One’s kids savings account is an ideal choice for saving while earning a decent APY. There are no minimum deposit requirements or monthly fees, and you can even set up multiple savings accounts for the same child or different children to help them achieve their goals. Capital One allows easy linking of your child’s savings account to your own Capital One accounts or accounts at other banks for convenient transfers. They also provide individual logins for parents and kids for online and mobile banking.
Best for Automatic Savings: MPH Bank
MPH Bank’s First account is designed for kids as young as 10, teaching them essential spending and saving skills. This account comes with a debit card and offers generous interest rates on deposits. The round-up widget automatically saves money with every purchase. Older teens can benefit from early paycheck access and enjoy fee-free ATM access. The First account also integrates with Zelle for convenient money transfers.
Best for Saving and Investing: Greenlight
Greenlight is more than just a debit card—it’s a comprehensive savings and investing platform for kids. With Greenlight, kids earn 1% cash back on purchases deposited into their savings account and can receive up to 5% in savings rewards, depending on their plan level. Parents can even contribute extra interest to encourage saving. Greenlight offers automatic transfers and the opportunity for kids to invest in fractional shares of stocks and ETFs, all without hidden fees.
Our Methodology
Our rankings are based on extensive research of savings accounts for children and teenagers offered by top banks, both traditional and online. We also considered options provided by credit unions. We assessed factors such as minimum deposit requirements, monthly fees, and annual percentage yield (APY). The best savings accounts for kids offer a winning combination of high-interest rates, low fees, and convenient access.
How to Open a Savings Account for Teenagers
To open a savings account for your teenager, follow these simple steps:
- Choose the right bank.
- Provide the necessary information, including names, dates of birth, and Social Security numbers.
- Link your account to your child’s savings account.
- Fund your child’s account with an initial transfer.
Keep in mind that some banks may require additional documentation to verify identities. Additionally, if you want your child to have a debit card, consider setting up a checking account or prepaid debit card account. Savings accounts typically have limits on withdrawals, usually around six per month.
When to Open a Children’s Savings Account
It’s never too early to start teaching your child about saving. The sooner they begin, the more they can benefit from the power of compound interest. If your child receives money from chores, gifts, or good grades, a savings account can help them manage and grow their savings. Note that some banks may have a minimum age requirement, so consider using a piggy bank until your child is old enough for an account.
How to Choose a Savings Account for Kids and Teens
When comparing savings accounts for kids and teens, consider the following:
- Minimum opening deposit requirements
- Minimum age to open the account
- Interest rate and APY
- Monthly maintenance fees
- Other banking fees
- Deposit and withdrawal transaction limits
Look for additional features that encourage saving, such as automatic savings options, calculators, or interactive tools. Some banks even allow parents to deposit extra interest into their child’s savings account as an incentive.
Frequently Asked Questions (FAQs)
Should you open a savings account for your kid?
Opening a savings account for your child is a smart move if they have their own money to save and you want to teach them about personal finance. It helps them learn about setting financial goals, earning interest, and saving regularly.
Do you pay taxes on children’s savings accounts?
If a child’s savings account earns interest, you may receive a Form 1099-INT from your bank at the end of the year. You must report the interest as taxable income on your tax return.
What are the benefits of opening kids’ savings accounts?
Kids’ savings accounts provide a safe and secure way for children to save and work towards their goals. They earn interest on their money, learn the value of saving regularly, and gain an understanding of how banking works.
Remember, the APY is subject to change, so check with the respective banks for the latest rates.
Now that you know the best savings accounts for kids in 2024, it’s time to empower your child with the tools and knowledge to achieve financial success. Start by opening a savings account and watch their money grow!