What's The Best Savings Account for Kids? September 2024

Opening a savings account for a child or teen is a great way to introduce them to the basics of saving and setting financial goals. When looking for a new account to open, you might start with your current bank first but it's helpful to expand your search. The best savings accounts for kids include options from online banks and credit unions and offer competitive interest rates and minimal fees.

Ready to help your child get into the savings habit? Learn which banks rate the best for helping kids and teens grow their money.

Best savings accounts for children and teens compared

Open a savings account for your child

Our recommendations for best savings accounts for kids

Best for flexible interest: GoHenry

GoHenry is a debit card for kids and teens that allows parents to fund the interest on savings goals. Parents can set up prepaid interest in any amount and adjust it at any time. For instance, you could set the APY at 5%, 10%, 15%, or even higher.

As kids (or parents) make deposits to savings goals, balances will earn interest at that rate. This can be a great way to incentivize kids to save and keep them motivated to continue saving money regularly. GoHenry is not free and there is a monthly fee to maintain an account. However, the monthly fee is $4.99 per kid, but it’s $9.98 for up to four kids - so you get the third and fourth kids for free. You can also withdraw from any ATM at no extra cost.

Best for high interest savings: Step

Step is a digital banking platform that's designed to help teens spend, save, and build credit all before they turn 18. When parents open a Step account, their kids can get a debit card. More importantly, they earn a competitive APY on savings account balances. The current rate is on par with the best savings rates offered by online banks.

There is one caveat to earning interest on savings: Teens must have at least one qualifying direct deposit into their Step account per month. Aside from direct deposit, Step also offers a round-up feature that allows teens to round up debit card transactions automatically and roll the difference into savings.

Best for saving and building credit: FirstCard

FirstCard is a secured spending card for college students, with a twist. Balances in your FirstCard account earn interest so you can save while you're establishing your credit score. 

The APY you'll earn depends on which type of First Card account you have.

• First Card – $0 monthly fee; 1.25% APY
• First Card+ – $2.99 monthly fee; 4.25% APY

The rates are on par with what some of the best high-yield savings accounts offer. There are no monthly fees, overdraft fees, or hidden fees of any kind. There's no minimum deposit required either and you can earn cash back on eligible purchases to help grow your savings balance.

Money in your FirstCard account is FDIC insured up to $250,000. So it's a safe, secure way for older teens and college students to learn the basics of building credit, spending, and saving.

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Best for credit union savings: Alliant

If you're interested in opening a savings account at a credit union, Alliant is a great choice. Kids savings accounts earn a competitive APY that's well above the rate traditional banks typically pay for a standard savings account. Alliant pays the initial $5 deposit for you and there are no monthly maintenance fees when you opt in to e-statements.

This account is ideal for kids 12 and younger who are ready to start working toward their savings goals. Alliant offers an ATM card with this account so kids can deposit checks or cash, or make withdrawals. If you're also interested in a checking account, Alliant offers a teen checking option for older kids.

Best for saving toward multiple goals: Capital One 360

Capital One's kids savings account is a fee-friendly way to save while earning a decent APY. There are no minimum deposit requirements or monthly fees and parents can set up multiple savings accounts for the same child or different children in order to help them reach their goals.

You can easily link your child's savings account to your own Capital One accounts or to an account at a different bank for convenient transfers. Capital One lets parents and kids set up individual logins for online and mobile banking, which makes it easy to check balances or transfer funds on the go.

Best for automatic savings: MPH Bank

MPH Bank's First account is designed for kids as young as 10 who are ready to learn the basics of how to spend (and save) wisely. This account includes a debit card, but kids can also set up savings goals inside the mobile app and deposits earn a generous interest rate. The round-up widget is an automatic savings feature that makes it easy to save any time you make a purchase.

Older teens can be paid up to two days early with the direct deposit feature and there are no monthly fees. Kids have access to more than 55,000 fee-free Allpoint ATMs nationwide. In addition, the First account integrates with Zelle for easy money transfers.

Best for saving and investing: Greenlight

Greenlight is also a debit card for kids but it's more than that. With a Greenlight plan, kids can save money or invest it in the stock market. Kids earn 1% cash back deposited into savings when they spend with their Greenlight card and they can also get up to 5% in savings rewards monthly, depending on which level plan they have.

On top of those savings benefits, Greenlight offers a parent-paid interest option and automatic transfers for teens who want to save part of their paychecks regularly. Kids who are ready to step up their savings efforts can invest in fractional shares of stock or exchange-traded funds (ETFs), with no hidden fees.

Our methodology

We researched savings accounts for children and teenagers from top banks, including brick-and-mortar banks and online financial institutions. We also considered child savings account options offered by credit unions. In compiling our rankings, we researched the minimum opening deposit requirements, monthly fees, and annual percentage yield available. The best savings accounts for kids reflect the ones that offer the best combination of higher interest rates, low fees, and convenient access.

How to open a savings account for teenagers

If you'd like to open a savings account for a teen or child, choosing the right bank is the first step. Once you've done that, opening a savings account for kids is as simple as providing the bank with some required information.

Typically, banks will need the following to open an account for your child:

• Your name and your child's name
• Dates of birth for you and your child
• Social Security numbers for you and your child
• Your address and phone number

The bank may ask for additional documentation to verify your identity and your child's. Once you've filled in that information, you can move on to funding your new savings account.

Opening a child’s savings account at your current bank might be as simple as linking an existing account to it. If you're opening a savings account for a teen or child at a different bank, you'll need to link your account manually. You'll just need your account number and routing number to set up the initial transfer.

Keep in mind that if you want your child to be able to spend with a debit card, you may need to look into setting up a separate checking account or prepaid debit card account for that. Savings accounts typically have limits on how many withdrawals you can make per month. At many banks, the limit is six though it may be higher or lower, depending on which account you choose.

When to open a children's savings account

It's really never too soon to open a savings account for a child. The longer a child has to save, the more time they have to cash in on the power of compound interest.

A good time to open a children's savings account is when your child has some money to save. If they earn money from doing chores or receive cash gifts for birthdays and holidays, for instance, then a savings account can be a good place to keep it. Likewise, if you reward your kids with cash for good grades, then they can benefit from having a savings account of their own.

Keep in mind that banks may set a minimum age for when you can open a savings account for a child. For example, you might not be able to open a children's savings account until they turn six. In that case, you could still help your child build a savings habit using a piggy bank at home until they're old enough for a bank account.

How to choose a savings account for kids and teens

There are many savings accounts for children and teenagers out there but they aren't all equal. Shopping around can help you find the right savings account for your child's needs and goals.

Here are a few things to consider as you compare savings accounts for kids:

• Minimum opening deposit requirements
• Minimum age to open the account
• Interest rate and APY
• Monthly maintenance fees
• Other banking fees
• Deposit and withdrawal transaction limits

It's also helpful to look at what kind of features or tools a bank offers to encourage kids to save. Automatic savings features, calculators, or interactive games that teach children and teens about money are all things that can make a savings account more attractive. And some banks allow parents to deposit extra interest on their child’s savings as an encouragement to save.

Frequently asked questions (FAQs)

Should you open a savings account for your kid?

It can make sense to open a savings account for your child if they have their own money to save and you're ready to start teaching them about personal finance. A savings account can be a great way for kids to learn about setting financial goals and reaching them, while earning some interest on their money.

Do you pay taxes on children's savings accounts?

If a child's savings account earns interest, then you can expect your bank to issue you a Form 1099-INT at the end of the year. You'll have to report that interest as taxable income on your tax return.

What are the benefits of opening a kids' savings account?

Savings accounts are a safe, secure way for kids to save money and work toward their goals. As long as you're opening the account at an FDIC-insured bank, their money is protected and they can earn some interest as they save. More importantly, a savings account can be a useful way to teach kids the value of setting money aside regularly and they can also learn a little about how banking works.

*APY is subject to change. APY is updated as of July 2, 2024.