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Best Savings Accounts for Kids and Teens for April 2024—Rates Up to 7.00%

<p>MoMo Productions / Getty Images</p>

MoMo Productions / Getty Images

Reviewed by Thomas BrockFact checked by Sabrina Karl

We’ve been researching the best kid and teen accounts since 2021, starting with a pool of almost two dozen options. We’ve spent hours reviewing interest rates, fees, balance requirements, and special features designed for kids and parents, and our best overall pick is Capital One’s Kids Savings Account.

Capital One wins for offering interest on all balance amounts, allowing kids to upgrade to a checking account as they get older, and the option for kids and teens to set up specific savings goals in the app. We also give high marks to USAlliance Financial, Alliant Credit Union, and Spectrum Credit Union.

Also in the market for a great savings account for adults? Our daily ranking of the best high-yield savings accounts will take you to the Top 15 rates that are available nationwide.

Best Overall: Capital One’s Kids Savings Account

<p>Capital One</p>

Capital One

  • Interest Rate: 2.50% APY
  • Minimum Balance: $0
  • Monthly maintenance fee: None
  • ATM card available: Yes
  • Age Limits: Up to age 18, with checking available at 8



Why We Chose It

With interest paid on any balance amount, excellent mobile banking tools, the ability to establish multiple savings goals, and the option to grow into a youth checking account with a debit card, Capital One’s Kids Savings Account is our winner for the all-around best youth savings account.

Pros & Cons

Pros

  • Interest is paid on any balance

  • No minimum balance and no fees

  • A top-rated mobile app that includes parental controls

  • Availability of a Teen Checking Account with debit card

Cons

  • Interest rate is lower than other options

  • Multiple savings goals require opening multiple accounts

  • No ATM fee refunds on the checking account

Overview

Capital One has put more thought and effort into youth banking than a lot of its competitors, creating not only two account types for kids and teens but investing resources into developing kid- and parent-centric mobile app experiences specific to these accounts. Combined with no minimum balance to earn interest, no fees, and the ability to advance to a teen account with a debit card, these features make Capital One our overall pick for Best Kids Savings Account. 

No matter how much or how little your child has in their savings account, Capital One pays the same rate. Though it typically isn’t the highest rate you can earn on a youth account, the absence of a minimum or maximum balance makes it versatile. In addition, if your child moves into or adds a Teen Checking Account at Capital One, they’ll earn a little bit of interest on that account balance, too.

Interacting with the account is enhanced for both kids and parents by the well-designed mobile banking app, which enables automatic transfers from parent accounts to the youth account (think automated allowance payments) and the establishment of savings goals that will motivate your child to keep saving. The app is even more robust for the Teen Checking Account, offering separate parent and teen interfaces and providing parental controls. 

Capital One’s Teen Checking Account is slightly misnamed, as it’s available to any child age eight or older. This provides earlier access to a debit card than accounts that reserve this feature for kids ages 13 and up.

See the full Capital One review.

Best for Young Children: USAlliance Financial’s MyLife Savings for Kids

<p>USAlliance</p>

USAlliance

  • Interest Rate: 2% APY on first $500
  • Minimum Balance: $0
  • Monthly maintenance fee: None
  • ATM card available: After age 13
  • Age Limits: Up to age 12, with checking available at 13



Why We Chose It

For parents starting their child’s account at a very young age, it’s hard to do better than USAlliance’s MyLife Savings for Kids account. Its annual birthday bonus for pre-teen savers helps make it our top savings account choice for young children.

Pros & Cons

Pros

  • $10 in “birthday bucks” paid every year through age 12

  • Competitive interest rate on the first $500

  • Ability to move into a checking account at age 13

  • Joining the credit union is easy and virtually free

Cons

  • No ATM or debit card access until age 13

  • Credit union membership is required for both parent and child

  • Some other accounts pay interest on the whole balance

Overview

USAlliance understands how much children love birthday gifts, and parlays that into a reward for kids having their own savings account. By paying those under 13 a $10 birthday bonus every year, plus a generous interest rate on their first savings, USAlliance’s MyLife Savings for Kids wins our award for best youth account for young savers.

The earlier you open one of these for your child, the more “birthday bucks” they’ll score. They’ll also earn a highly competitive 2.00% APY on their balances up to $500. Very few youth accounts currently pay above 1%, so the earning potential here is significantly higher than most other options.

USAlliance also offers a MyLife Checking for Teens, allowing your child to add the more advanced account as they mature. They can open a MyLife Checking at age 13, and choose to receive an ATM or debit card at that time. Meanwhile, they can retain their MyLife Savings account to continue earning a high interest rate on up to $500 in savings.

Though USAlliance Financial is a credit union, it is open for anyone nationwide to join.

Best for Teens: Alliant Credit Union’s Kids Savings Account

<p> Alliant Credit Union</p>

 Alliant Credit Union

  • Interest Rate: 3.10% APY
  • Minimum Balance: $100 (to earn interest)
  • Monthly maintenance fee: None
  • ATM card available: At age 13
  • Age Limits: Up to age 12, with checking available at 13



Why We Chose It

Alliant Credit Union starts your child’s saving journey outright with a competitive interest rate, no fees, and an excellent mobile banking app designed for kids and parents. Then as your child ages, Alliant’s Teen Checking provides even more useful features, making it our pick for the best savings account for teens.

Pros & Cons

Pros

  • Competitive interest rate

  • Mobile banking app that provides child- and parent-friendly features

  • Teen checking account with debit card available at age 13

  • Teen checking pays interest and offers ATM fee refunds

Cons

  • Interest is only paid when balance is $100 or more

  • No ATM or debit card before age 13

  • Some youth accounts pay higher interest, although only on limited balances

Overview

For younger children, learning how to bank is an evolving process, and Alliant provides an excellent Stage 1 option with its Kids Savings Account, followed by an even more impressive Stage 2 option with its Teen Checking Account. Both pay competitive interest and offer well-designed mobile app experiences geared specifically toward kids and parents.

An Alliant Kids Savings Account can be opened for children 12 and younger. Anytime the account balance exceeds $100, Alliant will pay a respectable 3.10% APY (as of May 2023) with no maximum balance for earning that rate. The account can be accessed with a mobile banking app that has parents and kids in mind; it lets parents set automated recurring deposits into their child’s account and allows the child to monitor their balance, deposit birthday checks, and track progress toward a savings goal.

Once your child turns 13, they can add an Alliant Teen Checking Account and ATM/debit card. This is one of the best youth checking accounts nationally available, paying more interest on checking balances than most other accounts. The account has a 0.25% APY. What’s more, Alliant offers free ATM transactions at more than 80,000 ATMs nationwide, as well as up to $20 per month in ATM fee reimbursements.

Though Alliant is a credit union, joining is open to everyone and is both easy and free. In fact, Alliant will even contribute the $5 initial deposit into your child’s savings account.

Best for Maximizing Interest: Spectrum Credit Union’s MySavings Youth Account

<p>Spectrum Credit Union</p>

Spectrum Credit Union

  • Interest Rate: 7.00% APY on first $1,000
  • Minimum Balance: $0
  • Monthly maintenance fee: None
  • ATM card available: At age 13
  • Age Limits: Up to age 21



Why We Chose It

With the interest rate on Spectrum’s youth savings account so high it looks like a typo, the credit union earns our top marks for maximum interest earnings in a kid’s account.

Pros & Cons

Pros

  • Pays the highest nationally available APY on a savings account, on your first $1,000

  • Account can be held until age 21

  • Account holders age 13 and up can request an ATM card

Cons

  • No accompanying teen checking account available

  • Limited to one MySavings Youth Account per individual

  • Joining the credit union is not free for most people

Overview

With bank interest rates as low as they currently are, it’s hard to believe Spectrum’s youth savings account rate of 7% APY. However, this rate only applies to balances up to $1,000. This is the highest rate we found (by a mile) for any nationally available youth savings account (or adult account, for that matter), making it an easy choice for the best youth account to maximize interest.

Spectrum doesn’t offer a teen checking account, but it does allow kids to keep their MySavings Youth Account (and its stellar interest rate) longer than most other banks do, all the way through the age of 21. It also allows those ages 13 and up to opt for an ATM card. Account balances above $1,000 revert to the Primary Share Savings APY of 0.75%.

As a credit union, Spectrum does require joining in order to open an account, and though the process is easy, it is not free. Unless someone in your family is eligible through their employer or geographical residency, individuals must pay membership fees or donations to an affiliated nonprofit organization to gain Spectrum eligibility. In addition, a member must hold $25 in a savings account (though you will get this back should you ever end your credit union membership).

One side note is that Spectrum has a sister institution, Chevron Federal Credit Union. Though the eligibility rules are the same for those who don’t qualify another way, Chevron is open to a different set of employees and geographical residents, so it’s worth checking if you qualify for one or the other to avoid paying.

The Bottom Line

For an account that pays interest, offers a well-designed parent- and kid-focused mobile experience, and provides an easy on-ramp for your child to advance to teen checking, Capital One has all of your bases covered. It offers great options for growth with its youth savings accounts, especially with no minimum balance or fees. Plus, the mobile app has parental controls so you can help your kids make and achieve their savings goals.

Compare the Best Kids and Teen Savings Accounts

Category & Winner Interest Rate Minimum balance Age Limits Special Features
Capital One
Best Overall
2.50% APY $0 Up to age 18; checking at 8 Top-rated mobile app
USAlliance Financial
Best for Young Children
2.00% APY on first $500 $0  Through age 12; checking at 13 $10 annual birthday bonus through age 12 
Alliant Credit Union
Best for Teens
3.10% APY when you have $100 or more $100 to earn interest Up to age 12; checking at 13 Earn strong interest on whole balance. Also offers Excellent teen checking, with ATM fee refunds
Spectrum Credit Union
Best for Maximum Interest
7.00% APY on first $1,000 $0 Up to age 21 Highest youth account APY

In the News

In the News: Savings account rates reached higher in 2023 than we’d seen in more than 20 years, pushed up by the Federal Reserve’s rate-hike campaign that began in March 2022 to tame decades-high inflation. For its last four meetings, however, the Fed has held the federal funds rate steady, and signaled on Jan. 31 that the committee’s rate-hike cycle has almost certainly ended. While most Fed members expect two to four rate decreases will occur in 2024, the Fed has cautioned that it could be some time before the first cut is implemented.

Savings account yields closely follow the fed funds rate, so the Fed’s holding pattern has caused savings rates to plateau. But once it appears the Fed is ready to make a rate cut, saving account rates are expected to fall.

What is a Kids Savings Account and How Does It Work?

Kids or youth savings accounts are bank or credit union deposit accounts that are available only to customers younger than 21—though they’re sometimes capped at age 12 or 18. They provide a way for young savers to deposit funds and earn some interest, but also serve as a way for kids and teens to get familiar with how banking works. By establishing a relationship with a financial institution, learning how to handle things like online banking, and seeing the interest they’ve earned at the end of each month, a first bank account provides practical training for a child.

The best kid and teen savings accounts actually pay higher interest rates than adult accounts as a way to incentivize young savers. However, the balances on which those higher interest rates apply often are capped. What the savings account earns may also be change based on your child’s age. For instance, the account may pay a high rate to younger savers, but once they turn 18, their account maybe be converted to an adult account with a lower rate.

User Experience

“I have two teenagers and both have already had more than one high-yield savings account. When they were young children, I set up USAlliance accounts for each of them, gaining them that special birthday check every year. But once they each became teens, I moved them into savings accounts that have a related teen checking account with a debit card. I consider it an important part of their education here at home to learn how to use a debit card, to build good habits on managing spending vs. saving, and to become familiar with online and mobile banking.” – Sabrina Karl, Staff Writer for Investopedia

Types of Bank Accounts for Kids and Teens

For individuals younger than 18, banks and credit unions most commonly offer a savings account. But some also offer a checking account. Still others offer more than one savings or checking account type based on the minor’s age, such as a younger child’s savings account and then a teen checking account after they turn 13 or some other designated age. Another type of bank account for teens is a student account. These are generally offered to older teens, or even those over 18.

In any case, if the child for whom you are opening the account is younger than 18, you or another adult will need to put your name on the account as well. That makes it a joint account, since minors are prohibited from holding bank accounts on their own. Besides a parent, other common adults to use for a joint account with a child are a grandparent, an aunt or uncle, an adult sibling, or a guardian.

Pros and Cons of Savings Accounts for Kids and Teens

Pros

  • No fees

  • Low minimums

  • Parental controls

  • Learning opportunity for the child

Cons

  • Age limits apply

  • Higher APYs typically only available on small balances

  • Not all accounts have ATM or debit cards

Pros Explained

  • No fees: Kids’ savings accounts are typically free, so there are no monthly maintenance or account fees. 
  • Low minimums: Since children are unlikely to have large sums of money to deposit, savings accounts for kids tend to have low minimums; children can open a savings account with a minimum opening deposit as low as $0. 
  • Parental controls: Many kids’ savings accounts have parental controls, so parents can set limits on how much money kids can transfer or withdraw. 

Cons Explained

  • Age limits apply: Kids’ accounts are only available until a specific age. After that, the account is transferred to another account for different age groups, and the new account may have higher fees. 
  • Higher APYs only on small amounts: Many savings accounts geared toward children boast high annual percentage yields (APYs). But those higher APYs usually apply only to a small portion of the child’s account balance, such as the first $500. 
  • ATM and debit cards: Some kids and teen savings accounts will offer an ATM card, but others do not. And if you want your child to have a debit card, you’ll need to open a kids or teen checking account. The majority of these will specify a minimum age for debit card access,

Warning

Although the Federal Reserve lifted its limit on savings account withdrawals, some banks still limit customers to six withdrawals per month. If your child makes more withdrawals than that, there may be excess withdrawal fees.

How to Choose a Savings Account for Your Child

Choosing the best account for your child or teen comes down to shopping around to familiarize yourself with the various options and then choosing the financial institution and account that best meets your most important needs. Here are some things to consider:

  • The age of your child and how you expect them to use the account. For instance, if they are very young and you just want to have a place where they can deposit birthday checks from their grandparents and have their money earn some interest, you may prioritize earning a high interest rate.
  • If instead you have a child who is—or soon will be—a teen, you may value them having an account that provides a debit card, but also a good mobile app they’ll find easy to use. Being able to transfer money from checking to savings is also a useful feature.
  • Having parental controls so that you can see what they have spent using their debit card may also be among your priorities.

In the end, choosing a kids bank account is similar to choosing one for yourself. First you’ll need to decide what features are most valuable to you, and then find the account that checks the most of those priority boxes.

How to Open a Kids or Teen Savings Account

Most banks and credit unions, including those recommended above, allow online account opening, making it easy to start the process at home and on your schedule. It will include the following stesp:

  1. Gather your information – When opening a financial account for your minor child, you’ll need to provide their social security number, so be sure you have this available before you get started.
  2. Start the online account opening process – Go to the institution’s website and look for the button or link to “Open an Account”. Note that for accounts being opened at a credit union, you’ll need to establish membership. But this is generally easy and usually possible at the same time as opening the account.
  3. Provide your personal information – Like opening any other bank account, you’ll need to provide various personal information for your child, as well as for yourself since any applicant who is a minor will require an adult to serve as the primary account holder.
  4. Provide identification – Either during the online application process or in a follow-up step, you’ll most likely need to upload a copy of your photo identification, such as your driver’s license. Some institutions will ask for additional documentation.
  5. Fund the account (optional) – After the account is open, you may choose to fund it with money transferred from another institution. Sometimes you can do this during the account application process, while other times you can link an external account using digital banking a few days after the account has been opened.
  6. Enroll in online banking – You’ll want to establish online banking for yourself, and possibly for your child, depending on their age and if they will interact with their account directly. Some banks allow you to do this as part of the account opening process, while others make it a separate step, perhaps a day or more after completing the account application.

Alternatives to Savings Accounts for Kids and Teens

There may be times when your child needs access to bank accounts and services other than savings accounts. Depending on their needs, and perhaps any financial goals you have for them, one of the following alternatives may be a better fit.

  • Debit Cards for Teens – For kids learning how to manage money, debit cards designed for children and teens can be helpful. These cards give children access to cash up to a parent-specified limit, and they usually provide budgeting and financial educational resources too.
  • Checking Accounts for Teens – For teens that have started working and may need regular access to their bank account, a checking account may be a better choice than a savings account. A checking account allows the teen to make withdrawals via check or debit card, and it doesn’t limit how many withdrawals they can make per month.
  • Student Bank Accounts – For teens and young adults that may be too old for a kids’ savings account, a student bank account can be a useful alternative. These accounts are specifically designed for college students with low account minimums and no monthly fees.
  • Custodial Accounts – If you want to save for a child’s future, you can put money in a custodial account like a Uniform Gift to Minors Act (UGMA) account or Uniform Transfers to Minors Act (UTMA) account. You can contribute money and choose how to save or invest it, and when the child reaches the age of majority for their state, they’ll take ownership of the account. They can withdraw money to pay for college, buy a car, or purchase a first home.
  • Certificates of Deposit (CD) – If you know your child won’t use some of the funds in their account for a year or more, you might want to put some of their savings in a certificate of deposit. CDs are bank accounts that typically offer a higher rate than a standard savings account in exchange for you agreeing to keep the funds there for a set period of time. While the interest rate on savings accounts can change at any time, a CD’s rate is locked in until the term ends.
  • Brokerage Account – If your goal is to put away long-term savings for your child, you may want to consider opening a brokerage account in their name and investing funds in an stock market index fund—rather than hold it in a simple savings account. While savings accounts are safe and prevent you from losing money, money held in the stock market over a decade or longer will generally will grow a great deal more.
  • 529 Plans – For parents and family members that want to help a child pay for college, a 529 college savings plan can be an excellent option. It’s a tax-advantaged investment account that allows family members to contribute money for the child’s future education. The money is invested and can grow tax-deferred, and if the withdrawals are used to pay for qualifying expenses, the withdrawals are also tax-free.

When choosing a bank account for your child, make sure the bank is backed by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) so that your child’s deposits are protected in the unlikely scenario that the institution fails.

Why You Should Trust Us

Every day, Investopedia researches, rates, and reviews hundreds of financial products and services, covering the personal finance categories of bank accounts, savings vehicles, credit cards, insurance, brokerages, robo-advisors, loans, and retirement accounts. When reviewing bank accounts for kids and teens, we look at factors that will help readers choose the best account for their child and their family. Investopedia launched in 1999 and has been helping readers find the best kids bank accounts since 2021.

Frequently Asked Questions

Is a Kids or Teen Savings Account a Good Idea?

Knowing how to manage one’s money is an important life skill—and opening a savings account for a kid or a teen is a great way of teaching your child money skills by letting them dip their toe in the world of personal banking. It’s also ideal for them to have this experience while they are still a minor, and you are connected to the same account as a joint owner. That way you can help them manage the account and teach them money management and banking skills along the way. It’s far better for them to first experience this with the help of an adult co-owner on the account than for them to learn on their own after they turn 18.

At What Age Should a Child Have a Savings Account?

The age that’s best for a kids savings account is a personal decision. Some parents like setting up a savings account for their infant or toddler children so they can regularly make contributions to the account or deposit gift money received from others.

Other parents will find that the tween years (e.g., 10-12 years old) are a great time to start, as the child is old enough to learn something about banking, and may have some income to deposit, or may be interested in starting to spend some money on their own.

The third option is to open an account for your child when they are a teen, at which point they may be eligible to open a checking account with a debit card as a complement to their savings account. One recommendation is to open a teen bank account with your child by the time they are 16 or 17, so that you have at least a year to help them learn how to bank before they are free to open accounts on their own at age 18.

Can I Open a High-Yield Savings Account for My Child?

The answer is in the semantics. Yes, you can open a savings account that pays a high yield. The key is that it needs to be an account that’s open to minors as applicants. In contrast, most savings accounts—including all of the options in our daily ranking of the best high-yield savings accounts—are open only to applicants age 18 and older. Fortunately, you can find kid-friendly accounts that pay as much as—or possibly even more than—the best high-yield savings accounts.

Is a CD Better Than a Savings Account for a Child?

Certificates of deposit (CDs) could be a good option for money your child is holding in savings. CDs generally pay slightly higher interest than a savings account, in exchange for you agreeing to keep the funds in the CD until it matures. Typical CD terms range from 3 months to 5 years, and if you cash the CD in early, you’ll face an early withdrawal penalty.

While those under 18 are not legally able to open a CD on their own, you can open a CD for them if you do it through a custodial account. Not every financial institution will offer custodial accounts, but for those that do, the account would be in your child’s name, and the money would belong to them. But you or another adult must be named as the custodian of the account.

Deciding between putting your child’s money in a savings account vs. a CD comes down to when they will want to access the money. If you know they will hold some portion of their savings for months or even years without touching it, moving that amount into a custodial CD account could boost their earnings. But for money you think the child will want to access in the near term, a savings account offers the ability to withdraw the funds anytime your child wants.

What Documents Are Required to Open a Bank Account for My Child?

Each bank or credit union will have its own account opening process. But in general, you (or another adult serving as a co-account holder) will need to provide all the same kind of personal information and identification you would provide if opening an account for yourself. Even if the institution you’re dealing with is not an online bank, you’ll likely handle the application process online, so be prepared with a photo or scan of either your driver’s license or passport.

As for documentation for your child, some institutions will ask you to submit a photo or scan of their birth certificate. Or, if your child has a driver’s license, a photo or scan of this may be requested.

Are My Child’s Interest Earnings Taxable?

Whether or not your child needs to pay taxes on their savings account earnings depends on how much unearned income they’ve received during the year. Unearned income includes earnings such as bank interest and investment income, and any amount less than $2,500 is exempt from the regular income tax in 2023 under the “Tax On A Child’s Investment And Other Unearned Income” rule, more commonly known as the Kiddie Tax.

What Bank Has the Best Savings Accounts for Kids and Teens?

Capital One offers the best overall savings account for kids, paying interest on any balance amount. There are no monthly or account maintenance fees, and there’s no minimum balance required to open a new account. And Capital One allows kids to set up multiple accounts, so they can create an account for each of their savings goals. 

Once the child turns 18, the account is automatically converted to a Capital One 360 Savings account. Like the kids’ account option, a 360 Savings account has no monthly fees or account minimums.

What Banks Were Included in Your Review?

To present our top picks of the best kid and teen savings accounts, we looked at options from the following banks and credit unions: Alliant Credit Union, BECU, Capital One, Chase, Chevron Federal Credit Union, Citizens Bank, First Internet Bank, First Tech Federal Credit Union, Northpointe Bank, Pen Air Federal Credit Union, Teachers Federal Credit Union, and USAlliance Financial.

How We Picked the Best Kids & Teen Savings Accounts

We began our research by first identifying almost two dozen youth savings accounts that are available to consumers nationwide and that pay at least 0.25% APY. From there, we dug into the details to find those that charge no fees, offer the highest interest rates, allow the highest balances, and offer a complimentary checking or spending account. We also considered the age limits of each account, the mobile app features, and any added perks offered by the account, enabling us to distill the list down to these top five contenders.

Investopedia was founded in 1999, and has been reviewing kids’ savings accounts since 2019.

Learn More About Banking for Kids and Teens

Read the original article on Investopedia.

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