A savings account might be your child’s best introduction to banking. Did you know that savings accounts are also a great place for teens to stash their extra cash? They help keep your teen’s money secure and even pay a little extra interest. The more your teen saves, the more they’ll earn toward a vacation, that car they’ve been eyeing, or even their college tuition.
Why savings accounts rock
At a basic level, all savings accounts are the same. You earn interest for keeping your money there, and you’re allowed a maximum of 6 covered transactions per month under federal law. If your teen is under 18, you’ll need to cosign the account and share responsibility for it. Here’s what varies: the total interest rate and the fees. Traditional savings accounts at big banks have very little payout (right now, anyway), and probably aren’t worth your teen’s time. They’ll find the most bang for their buck (literally) at a credit union.
Teen savings accounts: NerdWallet’s picks
The best teen savings accounts have a low opening deposit, a high interest rate and no monthly fees. We scoured the Internet for you and found some of the best ones that fit our strict criteria, and, when possible, offer a few extra perks, too. Remember, if you don’t live near any of the credit unions listed here, be sure to stop by your neighborhood credit union and ask about their savings rates. Don’t be surprised if there’s a stampede. That’s right, America. The secret’s out!
iSave – Darden Employees Federal Credit Union (Orlando, FL)
The iSave account at Darden Employees Federal Credit Union is perfect for teens 13 – 17 that are just starting to save. It offers an impressive 5.00% APY on any balance up to $500, and it comes with free online and mobile banking. Plus, it appropriately increases account privileges with age. Teens 13 years and older can get an ATM card to withdraw money from their account. Teens 16 and older qualify for a corresponding checking account and debit card. Darden Employees Federal Credit Union is a national credit union with headquarters in South Orlando, Florida. The account gives you access to 30,000+ surcharge-free ATMs and 4,300+ CU service center shared branching locations. Credit union membership is open to all current employees and retirees of Darden Restaurants, the Orlando Sentinel and Reed Brennan Media Associates, plus family of eligible members.
Money Maker Account – Blackhawk Community Credit Union (Janesville, WI)
Blackhawk Community Credit Union’s Money Maker account earns a better-than-competitive interest rate: 0.30% APY. However, it also gives your teen (13 – 17) a great incentive to save by bumping that rate to 1.00% APY on a balance of $1,000 or more. This account also comes with an optional ATM card and a variety of helpful financial literacy materials, including the quarterly C-Note University newsletter, a Guide to Money handbook, and a pamphlet entitled Helping Your Teen Become Accountable. Blackhawk Community Credit Union has branches in Janesville, Edgerton, Delavan and Stoughton. Membership is open to anyone who lives, works or attends school in Rock, Walworth, Green, Jefferson or Dane counties in Wisconsin. Please see their membership page for additional ways to qualify.
Teen $avers – Matadors Community Credit Union (Northridge, CA)
Matadors Community Credit Union offers the Teen $avers account for teens 13 – 17. This account comes with an optional ATM card when your teen turns 16, plus access to online banking. Your teen will get a gift when they open their account, and another one each time they visit a branch. This account will also automatically convert to a regular savings account when your teen turns 18. Be sure to visit Matador’s Elements of Money page for teen-friendly tips on making money, navigating life, and adjusting to college. Matadors Community Credit Union has branches in Chatsworth and Northridge. Membership is open to anyone affiliated with Cal State University Northridge, or anyone who lives, works, worships or attends school in a nearby Southern California community. Please see their membership page for complete details and other ways to qualify.
Youth Saver – Utah Community Credit Union (Provo, UT)
Utah Community Credit Union’s Youth Saver account offers all youth up to age 17 a chance to earn money market interest rates on their savings. To encourage your teen to stick with their savings plan, they’re only allowed one withdrawal per year (unless a special need arises, of course). Once your teen turns 18, the Youth Saver automatically converts to a regular savings account, giving your teen full access to their money. Utah Community Credit Union has branches at UVU and BYU, plus additional branches in Heber, Nephi, Provo, Orem and surrounding cities. Membership is open to anyone who lives, works, worships or attends school in Utah, Wasatch, Juab or Sanpete counties. Immediate family of eligible members may also join.
Youth Savings – United Federal Credit Union (Saint Joseph, MI)
United Federal Credit Union’s Youth Savings account earns a high rate and has no fees or minimum balance requirement. It’s perfect if your teen needs an account that’s simple, yet flexible. United Federal Credit Union has 23 branches in six states: Arkansas, Indiana, Michigan, North Carolina, Nevada and Ohio. You may qualify for membership based on where you live or work. You may also join if one of your immediate family members has an account. For a complete list of select employee groups and individual state requirements, please see their membership application page.
MyFunds Savings – Northeast Credit Union (Portsmouth, NH)
Your teen will get a $10 iTunes gift card when they sign up for a MyFunds Savings account at Northeast Credit Union (offer expires November 30th, 2012), but the account’s long-term perks are the real incentive for saving. It offers 1.52% APY on your balance up to $500, making it another great choice for new teen savers and college students (up to age 22). You can open an account online or by visiting a local branch. Northeast Credit Union has branches in Portsmouth, Concord, Dover, Exeter, Lee, Manchester, Northwood and Rochester. Membership is open to anyone who lives, works or worships in Strafford, Rockingham, Hillsborough, Merrimack, Belknap or Carroll counties in New Hampshire, or Southern York County in Maine. Please see the membership eligibility page for additional ways to qualify.
Preferred Youth Savings – Mid American Credit Union (Wichita, KS)
Mid American Credit Union’s Preferred Youth Savings account offers your teen 0.50% APY, more than 5 times the national average APY for savings accounts. They’ll earn that amount regardless of their balance. Mid American Credit Union’s main branch is located in Wichita. Membership is open to anyone who lives, works or worships in an eligible county in Kansas. People who work for a company or organization with a permanent office in Kansas, members of the Consumers United Program, and family of eligible members may also join. Please see the membership page for complete details.
Teen Savings – St. Helens Community Federal Credit Union (Saint Helens, OR)
The Teen Savings account at St. Helens Community Federal Credit Union is perfect for tech-savvy teens 13 – 19. It comes with free online banking, online bill pay, text banking, e-statements and an online financial education program just for teens. If your teen is old enough for college, this account pairs perfectly with a Student Checking account, and can even serve as an alternative to traditional overdraft protection. Funds from the savings account can automatically be transferred into a Student Checking account if your teen has insufficient funds. St. Helens Community Federal Credit Union has branches in St. Helens, Scappoose and Rainier. Membership is open to anyone who lives, works, attends school, worships or volunteers in Columbia County or Sauvie Island in Oregon. Immediate family of eligible members may also join.
Teen ADVANTAGE Savings – Prairieland Federal Credit Union (Bloomington, IL)
Prairieland Federal Credit Union’s Teen ADVANTAGE Savings account pays more than double the national average APY and gives your teen the opportunity to win a quarterly prize, currently a $25 Best Busy gift certificate! To qualify every quarter, your teen needs to make a $10 minimum deposit in their savings account. It’s a great incentive to save. Prairieland Federal Credit Union has branches in Normal and Bloomington. Membership is open to anyone who lives, works, attends school, worships or volunteers in Mclean County, Illinois. Family of eligible members may also join.