Start children off on the way they should go, and even when they are old they will not turn from it. – Proverbs 22:6 NIV
One of the most important things we can do for our kids is to teach them early on about money management. The better we do this, the more of a chance they stand when entering a world full of temptations and messages all crying to buy this or that.
One way that my parents taught me about money was to set me up with a savings account. I remember that when I got my first job, my dad took me to the bank and opened up an account for me. It was neat to be able to deposit my earnings at the same place my dad banked and to get the periodic statements in the mail.
Today, many banks are kid-friendly. The good ones understand the importance of educating the younger generation and offer different programs and tools for parents so they have the best chance of succeeding with their finances. They probably also understand that by getting a child starting in savings early, they could have a banking customer for life.
Picking a savings account for a child doesn’t have to be difficult. Here are a few things to keep in mind before opening one for your child:
- Make sure there are no yearly fees
- Zero money required to open and little to no money required to maintain the account (though many could require at least $25 to keep the account open)
- Do you want a local bank in case your child needs to withdraw money from time to time?
- Does the bank have special programs for young savers?
- What is interest rate offered?
When the account is open, be sure to take the time to go over the monthly statements they’ll be receiving in the mail. Encourage them to start a “savings goal” or to save up money for a toy they have been wanting. One friend of mine even offers their child a “match” if they keep the money in the bank for a certain period of time.
Savings Accounts for Children
Here’s a list of some of the savings accounts that are tailored for children that you can take advantage of.
1. U.S. Bank Star Savers Account
Personally, we are U.S. Bank customers – so are a bit biased toward them. We’ve had a good banking relationship with them over the years and they offer this particular savings account for kids under the age of 17. When they reach 18, it automatically converts into a regular savings account.
- No monthly maintenance fees
- Free U.S. Bank ATM transactions
- $25 minimum required to open the account
2. Capital One (formerly ING) Orange4Kids Savings Account
This is an online savings account designed for children. The drawbacks to an online account is that the money is not readily available but this can also be a positive too.
- No fees
- No minimums required
- 0.75% APY (as of 10/10/12)
3. Wells Fargo Way2Save Savings Account
Wells Fargo offers a savings account with some educational benefits. They are involved with a program called Hands on Banking and a savings club which teaches your child about the importance of saving while earning fun rewards.
- No monthly maintenance fees
- $25 minimum required to open
4. USAA First Start Savings Account
If you are a member of the military – USAA offers a great savings account for children. I’ve heard nothing but great things about USAA.
- No fees regardless of balance
- Every ATM is free to withdraw money – USAA will reimburse fees using another bank
- Access to account via mobile app
5. Ally Bank Savings Account
Another online banking option – Ally has good customer service and competitive annual percentage yields. And of course . . . .
- No minimum deposit
- No monthly maintenance fees
- 6 transactions per statement cycle with no fee
- 0.95% APY (1/17/13)
Do you have a savings account for your child? Leave a comment and tell us your favorite!
{ 7 comments… read them below or add one }
The problem with a savings account under the child’s SS # is that having too much money can disqualify the child in the future for financial aid from the government, etc. Yes, the child/parents have saved money but they have too little for college, but too much for the financial aid.
How do you guys feel about 529 accounts? We just had our first child and are looking into those (Bright Start specifically). Would your advice be to just go regular savings account?
Hi Erik. Tim wrote a good article about the 529 and recommends having one of these open as well as a savings. http://christianpf.com/how-to-open-a-savings-account-for-a-child/. The good thing about the 529′s is they are tax-free when withdrawing for college tuition and expenses.
Good post. We just switched our kids savings accounts. We were with M&I Bank and BMO took over and added a monthly fee. The kids do not have much money in their accounts so a monthly fee was nonsense to me. We switched to ING, as we already have accounts with them.
Another good place to check for kids savings accounts is your local community banks or credit unions. A lot of them (in my area at least) have savings clubs for kids. We use Anheuser-Busch Employees’ Credit Union because my husband is an employee and their Earn & Learn Savings is 3.51% APY up to $1000. They also have Junior, Youth, & Young Adult accounts at 0.15% that are age-based so my 2 year olds receive post cards where they’ll get a new bouncy ball say, if they deposit $3 that month. They send those out every 2 months. It’s really neat and the kids love getting the cash out of their piggy banks and bringing it to the “big” bank where they can get neat little trinkets.
So the suggestion is to open a regular savings account first and THEN a 529?
I opened a savings account for my daughter at my local bank when she was young. They were able to tie it to my other accounts so I can manage it online on the same screen as my checking & savings. Since I was listed as the only custodian of the account, her father couldn’t clean it out when he left several years ago.