Best Savings Accounts for Kids
Parents want to do everything possible to give their children an incredible life. Along with raising them right, they’ll want to set their children up for the future. When it comes to getting a higher education, parents understand the importance of putting money aside now rather than later. That means they’ll have to find the best savings accounts for kids.
After all, it costs a lot to send kids off to college. For example, if your child attends a four-year private college without any scholarships or other financial assistance, you can expect to pay almost $35,000 each year. While the cost diminishes slightly to around $25,000 when attending a school out of state, even then, there’s a hefty price attached. Tuition for attending a public university is almost $10,000 each year, not to mention the price of books, lab fees, and so on. They’re looking at $50,000 minimum to go to college.
The great thing about starting a savings account for your child, whether for college or not, is that if you select the right financial institution, the money can grow through interest. By the time your son or daughter heads off to school or starts life as an adult, the money would have increased quite a bit. The goal is to choose a financial institution with the best terms and highest interest.
In 2019, several banks and credit unions stand out. You can open an account for your child at any age, or your kid can open one at the age of 18. At some point, your son or daughter would have enough money put aside to purchase a new car, have a down payment for a house, travel abroad or earn a college degree. The key is to start saving now and select a high-interest bearing account.
Remember, along with socking money away that earns interest, opening a savings account is an excellent way to teach financial responsibility to your child. Let’s find out which institutions offer the best savings accounts for kids!
Top-Rated Financial Institutions
The following establishments are the best options for a kid’s savings account.
Alliant Credit Union
For only $5, you can open a savings account for your child at Alliant Credit Union. According to experts who rank different financial institutions, this is one of the best for kids under the age of 7. As for interest, the account would earn 1.60% APY.
When your kid turns 13, he or she qualifies to apply for a teen checking account, which comes with a debit card that provides access to both this and the savings account. One important note, if you maintain a $100 daily average balance, the interest rate jumps to 2% APY.
There’s yet another advantage in that parents, grandparents or legal guardian with an Alliant account can link to the kid’s savings, making it easy to make deposits to help the money grow. With this type of savings account, you and your child can benefit from several educational programs that teach money management.
Capital One is yet another great choice. Although this savings account only pays 1% APY, you still have plenty of reasons for going this route. For starters, there’s no minimum deposit or a monthly fee. That means for only $1, you could open an account for your child.
Due to the features of a Capital One savings account, it typically works best for kids under the age of 18. If your child earns money by doing chores around the house, he or she could make small deposits that add up over time. Of the many benefits, the automatic plan is by far the most impressive, which comes complete with a schedule to allow regular deposits.
There’s even a mobile banking app available, which includes parental controls. With a designated login and PIN, you or another legal guardian can keep a watchful eye on the money going in and out of the account.
Justice Federal Credit Union
Although you need to deposit a minimum of $500 to open an account at Justice Federal Credit Union, the 2.76% APY makes it worth every cent. This account is beneficial to children of all ages, especially those 12 years and older. However, there’s another reason to give this credit union serious consideration.
By opening a Grow with Me Account, your child can earn a whopping 4.47% APY for the first 12 months. Afterwards, the APY drops, but it’s still impressive at 3.54% . The only drawback is that you or your child cannot deposit more than $1,000 a year. However, if you consistently add money, at that interest rate, it won’t take long to grow.
Once your child turns 18, the Grow with Me Account automatically converts to a student account, which comes with an assortment of benefits. At that time, your child would receive a Visa debit card that pays rewards for money spent on merchandise and travel. For both the initial and teen account, there are no monthly fees.
BECU (Boeing Employees Credit Union)
For this, you must be a member of the Boeing Employees Credit Union or BECU. Also, only people who work or live in Oregon, Idaho, and Washington State qualify. However, with a 6.17% APY on the first $500, it’s worth looking into if you qualify. Although the APY drops to only 0.10% for every dollar after the initial $500, this credit union’s Early Saver Account is still a good option.
Also, there’s no minimum deposit required or monthly maintenance fees. Designed specifically for children 17 years and under, this is an excellent way to start putting money aside and teaching your son or daughter about the importance of saving. Once your kid turns 18 years old, he or she can convert the kid’s account to a Member Advantage, which is the credit union’s top savings option.
Reasons for Choosing a Kid’s Savings Account
Savings accounts for kids are different from those that adults open. For one thing, the deposit amount required is dramatically less, and the financial institution often offers some type of educational program specific to money. With that, your child can learn not only to put money aside but also how to set goals, budget and become familiar with how the banking industry works.
When opening a savings account, you want to do business with a reputable, FDIC-insured financial institution. For added convenience, consider a bank or credit union with online access. That way, you can monitor your account’s activity from anywhere and at any time.
By around the age of 6years old, kids begin to understand accountability. They want to pick out their clothes for school, determine what you pack in their lunch and so on. With a savings account, you encourage independence and accountability, which they love. The simple act of opening an account will give your child a sense of pride and accomplishment that they can carry with them into adulthood.