How to choose an online kids savings account

Believe it or not, your child may have some lofty savings goals. Whether it’s the latest gadget, a trip to the museum or a gift for a sibling (imagine!), a kids savings account could be the perfect place for you and your child to save every penny. Starting a savings account for your child can also help teach them valuable lessons on essential financial and budgeting skills.

Many banks and credit unions have options for a kids savings account. If you are unsure what to look for to find the best kids savings account for your child, here are key features to consider.

What features to look for to find the best kids savings account for your family

To ensure you choose the best savings account for your child, here are a few key features to keep in mind.

• Interest earning account
• No monthly service fees
• Checking account available
• ATM card
• Mobile and online banking
• No minimum balance requirements
• Federally insured financial institution

1. Interest earning account

One of the biggest benefits of setting up a kids savings account for your child is the lessons you can teach them through the account. For example, after setting up the account, show your child how each month their savings will grow from interest. Look for accounts that say “high-rate” or “interest” in the description. The interest rate on a savings account may not make your child a millionaire, but it will help pave the path to becoming a financially savvy adult.

It will also teach them that not every bank account is the same. Some accounts will pay them a sizable percentage of interest on their balance, while others will pay little. Show them that it’s important to shop and compare the annual percentage yield (APY) when choosing an account.

2. No monthly service fees

According to a recent Bankrate survey, the average monthly fee for interest checking accounts is $15.33! Monthly service fees are common, but it’s easy to find accounts that won’t charge your child a monthly service fee for using them.

3. Checking account available

When your child becomes a teen, they’ll want a teen checking account. It will be easier for your child to make transfers and manage their accounts if their savings and checking are at the same bank or credit union. Teen checking accounts are also a great way to introduce your kid to money management and spending.

4. ATM card

Your child may want to save that birthday money from their relatives once they have a great savings account. Like a checking account with a debit card, a savings account with an ATM card helps your child deposit and withdraw cash with ease. You can also deposit checks at some ATMs if you don’t want to use your bank or credit union’s mobile app.

5. Mobile and online banking

With online banking, you can create an automatic savings plan by adding automatic transfers of an allowance, set up alerts and manage the money in the account. Look for a financial institution with a well-rated mobile banking app or an award-winning online banking platform. Nowadays, many people do most banking digitally, and some institutions are fully digital, so a great online banking experience is important.

6. No minimum balance requirements

Look closely at the terms and conditions on the account. The balance in your kids savings account may fluctuate, and you want to ensure that your child will not be charged if the balance falls under a specific amount. After saving for a few months, your kid might want to use their allowance money for something big. If there is a minimum balance requirement, be sure your child won’t fall beneath it before taking out the cash.

7. Federally insured financial institution

Your deposits at banks can be insured by the Federal Deposit Insurance Corporation (FDIC). At credit unions, your deposits can be insured by the National Credit Union Administration (NCUA).

Both the FDIC and NCUA insure your deposits up to $250,000. Make sure your bank or credit union is insured by the FDIC or NCUA. That way, if the financial institution closes, your money won’t disappear.

Try a credit union

Credit unions are owned by their members, not by stockholders. When you open a savings account for your child at a credit union, your child becomes a member-owner at the credit union.

This could be an important lesson for your family. You can share with your family that credit unions prioritize their members’ needs. If you’re an owner, you could get great features like the ones listed above.

How old do you have to be to open a bank account?

Good news! You can have a savings account at any age. Children younger than 13 can have a kids savings account with their parent or legal guardian as a joint owner. When the minor turns 13, the kids account will typically become a regular savings account automatically.

At Alliant, children 13-17-years-old can open an Alliant teen checking account, which includes an Alliant High-Rate Savings account. A parent or legal guardian is also required as a joint owner, which can be removed from the account once the teen turns 18.

What happens to a kids savings account when the child turns 13?

At Alliant Credit Union, a kids savings account becomes our High-Rate Savings account when the child turns 13-years-old. The funds will remain in the account.

When shopping for a kids savings account, consider the account your child will be transferred to after aging out of their kids account. Pick a bank or credit union that gives your child the same great features, no matter their age or account balance.

Read more on opening a kids saving account:

• 6 reasons kids should have a savings account
• How to open a savings account for kids (plus tips)
• 5 mistakes to avoid when starting a kids savings account