Best Savings Accounts for Kids and Teens – CNET [CNET]

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If you’re teaching your kids about the value of a dollar, you could take the old-fashioned route — putting coins and cash in a piggy bank on the shelf. But nowadays, banks are offering a better alternative that parents and kids can both benefit from. 

Savings accounts for kids and teens let them park their savings in a safe spot and take advantage of a few perks. While that old-school approach can be fun, the right savings account can offer personal finance lessons and may even come with interest to help your child earn more toward their savings goals.

Here’s a rundown of the best savings accounts for kids and teens and how to choose the right now.

What is a kids savings account?

A kids savings account is designed with a young saver in mind. Here’s how it works: A parent or guardian opens and co-owns the bank account for their child, in most cases, although there are some exceptions for teen accounts. Kids can then transfer, deposit and withdraw money. The best kids savings accounts have minimal fees, no minimum balance requirement and a mobile app for parents and kids to both conveniently manage the account. Depending on the account, parents generally can set controls for their kids to prevent them from overspending.

Some banks require parents to link their external bank account for transfers. Kids savings accounts are generally for those under 18, but some banks have a requirement for children to be at least 12 years old.

Best savings accounts for kids and teens

Pros and cons of savings accounts for kids and teens

Should you open an account for your kid, or simply stash some of their money in your own account? Since your child will be in the early stage of managing their money, this decision will entail some extra work on your end and how you want to teach your child about money. You may be leaning toward giving your child more independence with their own savings account, but you also may not want to manage another account.

Here are a few pros and cons to consider before opening another account.

How to choose a savings account for your kid or teenager

When choosing the best savings accounts for your kid or teenager, here’s a rundown of some of the key tips to follow:

Look local: There are quite a few credit unions that offer extra perks with their savings accounts, such as bonuses for good grades, like Sky Federal Credit Union. These tend to be smaller, local financial institutions — hence why they don’t appear on our list. But if there’s one in your town, this can be a great win-win: better academic performance and better personal finance habits.

Start with where you already bank: Many institutions require that the parent or guardian of the kids’ savings account owner also have an account at the same bank or credit union. If you don’t want to open another account elsewhere, start with where you already bank. Since accounts for grown-ups often come with fees and minimum balance requirements, be sure to think about your own financial situation, including your savings APY, minimum balance requirements and fees.

Ask about education tools: A kids savings account should offer more than a place to park their money. Evaluate the bank’s mobile app to see if it’s an easy way to talk to your child about money — some offer financial literacy courses and games, such as PNC. If your child simply sees the savings balance, they don’t really learn much. Instead, money management guides and lessons can help them make smart budgeting decisions.

How to open a savings account for your kid

The requirements for opening a savings account for your kid vary from bank to bank. Generally, you’ll need to follow these steps:

Find the bank and account that works for you: While some online-only banks can offer higher savings rates, credit unions also have a few outstanding perks. Think about what bank services and products you’ll need alongside your kid’s savings account since some institutions may require the co-owner of the account to have an account there as well. 

Gather your information: Regardless of whether you need your own account, you will need to include your personal details – including you and your child’s Social Security number – as a co-owner. The bank will also need your child’s Social Security number or a current passport, but if your child is older, you may also want to include a school ID or a driver’s license. Additionally, the bank will need other personal information, such as your physical address, phone number and email. 

David McMillin writes about credit cards, mortgages, banking, taxes and travel. Based in Chicago, he writes with one objective in mind: Help readers figure out how to save more and stress less. He is also a musician, which means he has spent a lot of time worrying about money. He applies the lessons he’s learned from that financial balancing act to offer practical advice for personal spending decisions.