| Category & Winner | Interest Rate | Minimum balance | Age Limits | Special Features |
|---|---|---|---|---|
| Capital One Best Overall |
2.50% APY | $0 | Up to age 18; checking at 8 | Top-rated mobile app |
| USAlliance Financial Best for Young Children |
2.00% APY on first $500 | $0 | Through age 12; checking at 13 | $10 annual birthday bonus through age 12 |
| Alliant Credit Union Best for Teens |
3.10% APY when you have $100 or more | $100 to earn interest | Up to age 12; checking at 13 | Earn strong interest on whole balance. Also offers Excellent teen checking, with ATM fee refunds |
| Spectrum Credit Union Best for Maximum Interest |
7.00% APY on first $1,000 | $0 | Up to age 21 | Highest youth account APY |
In the News
In the News: Savings account rates reached higher in 2023 than we’d seen in more than 20 years, pushed up by the Federal Reserve’s rate-hike campaign that began in March 2022 to tame decades-high inflation. For its last four meetings, however, the Fed has held the federal funds rate steady, and signaled on Jan. 31 that the committee’s rate-hike cycle has almost certainly ended. While most Fed members expect two to four rate decreases will occur in 2024, the Fed has cautioned that it could be some time before the first cut is implemented.
Savings account yields closely follow the fed funds rate, so the Fed’s holding pattern has caused savings rates to plateau. But once it appears the Fed is ready to make a rate cut, saving account rates are expected to fall.
What is a Kids Savings Account and How Does It Work?
Kids or youth savings accounts are bank or credit union deposit accounts that are available only to customers younger than 21—though they’re sometimes capped at age 12 or 18. They provide a way for young savers to deposit funds and earn some interest, but also serve as a way for kids and teens to get familiar with how banking works. By establishing a relationship with a financial institution, learning how to handle things like online banking, and seeing the interest they’ve earned at the end of each month, a first bank account provides practical training for a child.
The best kid and teen savings accounts actually pay higher interest rates than adult accounts as a way to incentivize young savers. However, the balances on which those higher interest rates apply often are capped. What the savings account earns may also be change based on your child’s age. For instance, the account may pay a high rate to younger savers, but once they turn 18, their account maybe be converted to an adult account with a lower rate.
User Experience
“I have two teenagers and both have already had more than one high-yield savings account. When they were young children, I set up USAlliance accounts for each of them, gaining them that special birthday check every year. But once they each became teens, I moved them into savings accounts that have a related teen checking account with a debit card. I consider it an important part of their education here at home to learn how to use a debit card, to build good habits on managing spending vs. saving, and to become familiar with online and mobile banking.” – Sabrina Karl, Staff Writer for Investopedia
Types of Bank Accounts for Kids and Teens
For individuals younger than 18, banks and credit unions most commonly offer a savings account. But some also offer a checking account. Still others offer more than one savings or checking account type based on the minor’s age, such as a younger child’s savings account and then a teen checking account after they turn 13 or some other designated age. Another type of bank account for teens is a student account. These are generally offered to older teens, or even those over 18.
In any case, if the child for whom you are opening the account is younger than 18, you or another adult will need to put your name on the account as well. That makes it a joint account, since minors are prohibited from holding bank accounts on their own. Besides a parent, other common adults to use for a joint account with a child are a grandparent, an aunt or uncle, an adult sibling, or a guardian.
Pros and Cons of Savings Accounts for Kids and Teens
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No fees
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Low minimums
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Parental controls
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Learning opportunity for the child
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Age limits apply
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Higher APYs typically only available on small balances
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Not all accounts have ATM or debit cards
Pros Explained
- No fees: Kids’ savings accounts are typically free, so there are no monthly maintenance or account fees.
- Low minimums: Since children are unlikely to have large sums of money to deposit, savings accounts for kids tend to have low minimums; children can open a savings account with a minimum opening deposit as low as $0.
- Parental controls: Many kids’ savings accounts have parental controls, so parents can set limits on how much money kids can transfer or withdraw.
Cons Explained
- Age limits apply: Kids’ accounts are only available until a specific age. After that, the account is transferred to another account for different age groups, and the new account may have higher fees.
- Higher APYs only on small amounts: Many savings accounts geared toward children boast high annual percentage yields (APYs). But those higher APYs usually apply only to a small portion of the child’s account balance, such as the first $500.
- ATM and debit cards: Some kids and teen savings accounts will offer an ATM card, but others do not. And if you want your child to have a debit card, you’ll need to open a kids or teen checking account. The majority of these will specify a minimum age for debit card access,
Although the Federal Reserve lifted its limit on savings account withdrawals, some banks still limit customers to six withdrawals per month. If your child makes more withdrawals than that, there may be excess withdrawal fees.
How to Choose a Savings Account for Your Child
Choosing the best account for your child or teen comes down to shopping around to familiarize yourself with the various options and then choosing the financial institution and account that best meets your most important needs. Here are some things to consider:
- The age of your child and how you expect them to use the account. For instance, if they are very young and you just want to have a place where they can deposit birthday checks from their grandparents and have their money earn some interest, you may prioritize earning a high interest rate.
- If instead you have a child who is—or soon will be—a teen, you may value them having an account that provides a debit card, but also a good mobile app they’ll find easy to use. Being able to transfer money from checking to savings is also a useful feature.
- Having parental controls so that you can see what they have spent using their debit card may also be among your priorities.
In the end, choosing a kids bank account is similar to choosing one for yourself. First you’ll need to decide what features are most valuable to you, and then find the account that checks the most of those priority boxes.
How to Open a Kids or Teen Savings Account
Most banks and credit unions, including those recommended above, allow online account opening, making it easy to start the process at home and on your schedule. It will include the following stesp:
- Gather your information – When opening a financial account for your minor child, you’ll need to provide their social security number, so be sure you have this available before you get started.
- Start the online account opening process – Go to the institution’s website and look for the button or link to “Open an Account”. Note that for accounts being opened at a credit union, you’ll need to establish membership. But this is generally easy and usually possible at the same time as opening the account.
- Provide your personal information – Like opening any other bank account, you’ll need to provide various personal information for your child, as well as for yourself since any applicant who is a minor will require an adult to serve as the primary account holder.
- Provide identification – Either during the online application process or in a follow-up step, you’ll most likely need to upload a copy of your photo identification, such as your driver’s license. Some institutions will ask for additional documentation.
- Fund the account (optional) – After the account is open, you may choose to fund it with money transferred from another institution. Sometimes you can do this during the account application process, while other times you can link an external account using digital banking a few days after the account has been opened.
- Enroll in online banking – You’ll want to establish online banking for yourself, and possibly for your child, depending on their age and if they will interact with their account directly. Some banks allow you to do this as part of the account opening process, while others make it a separate step, perhaps a day or more after completing the account application.
Alternatives to Savings Accounts for Kids and Teens
There may be times when your child needs access to bank accounts and services other than savings accounts. Depending on their needs, and perhaps any financial goals you have for them, one of the following alternatives may be a better fit.
- Debit Cards for Teens – For kids learning how to manage money, debit cards designed for children and teens can be helpful. These cards give children access to cash up to a parent-specified limit, and they usually provide budgeting and financial educational resources too.
- Checking Accounts for Teens – For teens that have started working and may need regular access to their bank account, a checking account may be a better choice than a savings account. A checking account allows the teen to make withdrawals via check or debit card, and it doesn’t limit how many withdrawals they can make per month.
- Student Bank Accounts – For teens and young adults that may be too old for a kids’ savings account, a student bank account can be a useful alternative. These accounts are specifically designed for college students with low account minimums and no monthly fees.
- Custodial Accounts – If you want to save for a child’s future, you can put money in a custodial account like a Uniform Gift to Minors Act (UGMA) account or Uniform Transfers to Minors Act (UTMA) account. You can contribute money and choose how to save or invest it, and when the child reaches the age of majority for their state, they’ll take ownership of the account. They can withdraw money to pay for college, buy a car, or purchase a first home.
- Certificates of Deposit (CD) – If you know your child won’t use some of the funds in their account for a year or more, you might want to put some of their savings in a certificate of deposit. CDs are bank accounts that typically offer a higher rate than a standard savings account in exchange for you agreeing to keep the funds there for a set period of time. While the interest rate on savings accounts can change at any time, a CD’s rate is locked in until the term ends.
- Brokerage Account – If your goal is to put away long-term savings for your child, you may want to consider opening a brokerage account in their name and investing funds in an stock market index fund—rather than hold it in a simple savings account. While savings accounts are safe and prevent you from losing money, money held in the stock market over a decade or longer will generally will grow a great deal more.
- 529 Plans – For parents and family members that want to help a child pay for college, a 529 college savings plan can be an excellent option. It’s a tax-advantaged investment account that allows family members to contribute money for the child’s future education. The money is invested and can grow tax-deferred, and if the withdrawals are used to pay for qualifying expenses, the withdrawals are also tax-free.
Why You Should Trust Us
Every day, Investopedia researches, rates, and reviews hundreds of financial products and services, covering the personal finance categories of bank accounts, savings vehicles, credit cards, insurance, brokerages, robo-advisors, loans, and retirement accounts. When reviewing bank accounts for kids and teens, we look at factors that will help readers choose the best account for their child and their family. Investopedia launched in 1999 and has been helping readers find the best kids bank accounts since 2021.
Frequently Asked Questions
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Knowing how to manage one’s money is an important life skill—and opening a savings account for a kid or a teen is a great way of teaching your child money skills by letting them dip their toe in the world of personal banking. It’s also ideal for them to have this experience while they are still a minor, and you are connected to the same account as a joint owner. That way you can help them manage the account and teach them money management and banking skills along the way. It’s far better for them to first experience this with the help of an adult co-owner on the account than for them to learn on their own after they turn 18.
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The age that’s best for a kids savings account is a personal decision. Some parents like setting up a savings account for their infant or toddler children so they can regularly make contributions to the account or deposit gift money received from others.
Other parents will find that the tween years (e.g., 10-12 years old) are a great time to start, as the child is old enough to learn something about banking, and may have some income to deposit, or may be interested in starting to spend some money on their own.
The third option is to open an account for your child when they are a teen, at which point they may be eligible to open a checking account with a debit card as a complement to their savings account. One recommendation is to open a teen bank account with your child by the time they are 16 or 17, so that you have at least a year to help them learn how to bank before they are free to open accounts on their own at age 18.
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The answer is in the semantics. Yes, you can open a savings account that pays a high yield. The key is that it needs to be an account that’s open to minors as applicants. In contrast, most savings accounts—including all of the options in our daily ranking of the best high-yield savings accounts—are open only to applicants age 18 and older. Fortunately, you can find kid-friendly accounts that pay as much as—or possibly even more than—the best high-yield savings accounts.
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Certificates of deposit (CDs) could be a good option for money your child is holding in savings. CDs generally pay slightly higher interest than a savings account, in exchange for you agreeing to keep the funds in the CD until it matures. Typical CD terms range from 3 months to 5 years, and if you cash the CD in early, you’ll face an early withdrawal penalty.
While those under 18 are not legally able to open a CD on their own, you can open a CD for them if you do it through a custodial account. Not every financial institution will offer custodial accounts, but for those that do, the account would be in your child’s name, and the money would belong to them. But you or another adult must be named as the custodian of the account.
Deciding between putting your child’s money in a savings account vs. a CD comes down to when they will want to access the money. If you know they will hold some portion of their savings for months or even years without touching it, moving that amount into a custodial CD account could boost their earnings. But for money you think the child will want to access in the near term, a savings account offers the ability to withdraw the funds anytime your child wants.
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Each bank or credit union will have its own account opening process. But in general, you (or another adult serving as a co-account holder) will need to provide all the same kind of personal information and identification you would provide if opening an account for yourself. Even if the institution you’re dealing with is not an online bank, you’ll likely handle the application process online, so be prepared with a photo or scan of either your driver’s license or passport.
As for documentation for your child, some institutions will ask you to submit a photo or scan of their birth certificate. Or, if your child has a driver’s license, a photo or scan of this may be requested.
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Whether or not your child needs to pay taxes on their savings account earnings depends on how much unearned income they’ve received during the year. Unearned income includes earnings such as bank interest and investment income, and any amount less than $2,500 is exempt from the regular income tax in 2023 under the “Tax On A Child’s Investment And Other Unearned Income” rule, more commonly known as the Kiddie Tax.
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Capital One offers the best overall savings account for kids, paying interest on any balance amount. There are no monthly or account maintenance fees, and there’s no minimum balance required to open a new account. And Capital One allows kids to set up multiple accounts, so they can create an account for each of their savings goals.
Once the child turns 18, the account is automatically converted to a Capital One 360 Savings account. Like the kids’ account option, a 360 Savings account has no monthly fees or account minimums.
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To present our top picks of the best kid and teen savings accounts, we looked at options from the following banks and credit unions: Alliant Credit Union, BECU, Capital One, Chase, Chevron Federal Credit Union, Citizens Bank, First Internet Bank, First Tech Federal Credit Union, Northpointe Bank, Pen Air Federal Credit Union, Teachers Federal Credit Union, and USAlliance Financial.
How We Picked the Best Kids & Teen Savings Accounts
We began our research by first identifying almost two dozen youth savings accounts that are available to consumers nationwide and that pay at least 0.25% APY. From there, we dug into the details to find those that charge no fees, offer the highest interest rates, allow the highest balances, and offer a complimentary checking or spending account. We also considered the age limits of each account, the mobile app features, and any added perks offered by the account, enabling us to distill the list down to these top five contenders.
Investopedia was founded in 1999, and has been reviewing kids’ savings accounts since 2019.
Learn More About Banking for Kids and Teens