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Your child might already know about bank accounts from books or TV. But if they ask where money comes from or how to have their own, it might be time to open a kids savings account.
A kid-focused savings account provides your child with a glimpse into how banks and credit unions work and gives them a place to stash allowance and birthday money. If your child has accumulated funds and you want them to learn about banking, you can give them the opportunity to grow their money in a savings account.
Here are answers to common questions about savings accounts for kids.
Is my child old enough for a savings account?
Your child is most likely old enough for a savings account. You can even open a savings account for a baby, if you open the account with them. Kids savings accounts typically require a parent or guardian to have joint ownership or control. That means you can manage the finances until your child is ready to manage them. Because of that setup, your child probably won't have to meet a minimum age requirement to open an account.
There's no need to rush to open one if you feel your child isn't ready, however. A simple piggy bank will probably suffice for very young children.
» Check out NerdWallet's best savings accounts for kids
Which kids' savings accounts are best?
The best kid savings accounts have a few features in common, including no monthly fees. Keep an eye out for the following:
No minimum balance requirement or monthly maintenance fees: Saving should be a good thing. Don’t let fees diminish what they put into their accounts.
An above-average interest rate: The national average savings rate is currently 0.07%. At national banks, savings rates are typically even closer to zero, but many credit unions and online banks offer better yields. The more interest an account earns, the faster your child’s bank balance can grow.
Easy online access: Check for features such as mobile apps with high ratings in the app stores, electronic statements and a solid website where you can check your transactions. The ability to accept mobile check deposits and make auto transfers with other bank accounts is also a plus.
How do I open a savings account for a baby or child?
Opening a savings account for your child isn't much different from getting a new account yourself. As the adult, you’ll need identifying information, such as a driver’s license, passport or other government-issued photo ID. You’ll also need to provide basic information for both of you, including your and your child’s birthdays and Social Security (or taxpayer identification) numbers.
Some banks will require a minimum opening deposit, such as $25. Others don’t have any minimum opening deposit.
Should my child also use a banking app?
If your son or daughter is ready to make regular purchases and begin to practice budgeting, a banking app could be a solid option, in addition to a savings account. Kid-focused banking apps have features similar to checking accounts and can generally let minors track spending, set budget goals and set up automatic savings transfers.
Some come with access to prepaid debit cards. Parents or guardians can open these accounts on behalf of their children, and are able to set spending limits and keep tabs on purchases.
Prioritizing saving over spending is a valuable life lesson, one that takes time to learn. Opening a savings account for your child is one of the best ways to introduce that concept at an early age.
» Want to dig deeper? Explore NerdWallet's best online savings options