It is never too early to teach your kids money management skills and show them the value of sound financial habits. Teaching your kids money management skills early in life can reap bountiful rewards by the time they become adults. One of the first lessons you want to teach is the power of interest rates and how your money can grow. Opening a savings account with a competitive interest rate is a good first step, but what are the absolute best bank accounts for kids? Let’s find out.
Here are the contenders:
- Ally Savings Account
- Golden 1 Credit Union Youth Savings Account
- BECU Early Savers Account
- Citizens Bank CollegeSaver
- CapitalOne Kids Savings Account
- Alliant Credit Union Kids Savings Account
Ally Savings Account
We’ll start with Ally, as it offers one of the best interest rates of the banks on this list at 1% APY. The problem is that Ally does not offer savings accounts specifically for kids. They also do not offer joint ownership, so the account must be in your name and not your child’s. Advantages of Ally beyond the interest rate are no monthly fees or minimum balance requirement, along with an easy to use mobile app. While this is not technically a kids savings account, Ally Bank should at least be under consideration.
Golden 1 Credit Union Youth Savings Account
Golden 1 Credit Union is one of only a few banks to offer savings accounts specifically for kids, so their place on this list is due primarily to their 0.40% APY. While that is still lower than multiple banks on this list, it’s exponentially higher than bigger banks like Chase, Fifth Third, and PNC. Golden 1 offers joint ownership of the account, but your child can make withdrawals and deposits to experience what it’s like to manage money.
Highest Interest Rate Savings Account for Kids
BECU Early Savers Account
The BECU Early Savers Account is ideal for teaching your kids the power of an interest rate, as the APY starts at 4.07%. But the catch is that you only receive that rate up until you have a balance of $500. Now, not many kids are going to have an account balance of over $500. But once you do, it might be time to find a new bank, especially if you have a teenager, as the rate drops to 0.02%.
The other problem with the Boeing Employees Credit Union is that it is highly concentrated in the state of Washington. Anyone can become a member, not just those that work for Boeing, but only those that live in the region are likely to find this bank beneficial. If you do live in Washington, BECU has other benefits beyond the interest rate. There is no minimum balance to open an account and no monthly fees, and parents have joint ownership of the account.
Best Bank Account for College Savings
Citizens Bank CollegeSaver
Opening a kid’s savings account at Citizens Bank could be the right choice for parents looking to save for college. On your child’s 18th birthday, Citizens Bank will give you a $1,000 bonus, with interest added as if the $1,000 had been there since day one. Now, the downside to this account is that the interest is only 0.05% APY. Another downside is that the account requires a minimum monthly deposit.
The minimum opening balance for the account is just $25 if you open it before your child turns six. But that number jumps up to $500 if your child is between six and 12 years old. The minimum monthly deposit amount similarly varies with age. If you open the account before your child is six, the minimum monthly deposit is $25. But if you wait until after their sixth birthday, the minimum monthly deposit goes up to $50.
Runner Up Best Kids Bank Account
CapitalOne Kids Savings Account
If you already have a bank account with CapitalOne, you might want to elevate this one to the top of your personal list. With a CapitalOne Kids Savings account, you have no minimum balance or monthly deposits, and there are no fees. The account can be especially helpful for those that are already banking with CapitalOne due to their automatic “allowance” transfers and familiarity with the mobile app.
There is no ongoing education for kids, but CapitalOne makes it easy to track savings goals. Kids can also see how their money can grow with savings calculators. A CapitalOne Kids Savings Account is a fine choice for any parent, but it comes up short in a few areas when compared to the next bank.
Best Bank Account for Kids
Alliant Credit Union Kids Savings Account
Alliant checks all the boxes when it comes to the best bank account for kids. It features one of the highest interest rates you’ll find, ongoing education for your child, and a helpful Alliant Mobile Banking app. Even if you don’t have direct access to Alliant through an employer, it costs just $5 to become eligible, and Alliant will donate the $5 to Foster Care to Success.
The interest rate is one of the largest factors, and Alliant steps up to the plate with a 0.75% APY that they claim is 9.4 times higher than most banks. Alliant will pay the $5 initial deposit to get your kid started, and you or a grandparent have joint ownership over the account. There is also no monthly minimum deposit, and there are no monthly fees if you sign up for electronic statements. And if you have a teenager, Alliant Teen Checking is specifically designed to help your teen learn how to manage money.
When compared to the other banks on this list, there is no savings account that comes close to the one offered by Alliant Credit Union. You receive a very competitive interest rate, joint ownership, and ongoing financial education for your child. If there is a branch in your area, there is no doubt that Alliant Credit Union has the best bank account for kids.