Best Savings Accounts for Kids
Where do you see your kid or teen in the next ten years? College? Wherever it might be, did you know that you can provide an easy way for them to get there? Yes, you can! One of the most reliable ways to achieve that is by putting money aside in a savings account for children. But how can you begin? We will show you everything—including the best savings account for a kid—in this article.
How to Open a Savings Account for Children
The age of your child is a major determinant of whether you will be allowed to open a savings account for them. With some accounts, you may open one for your child as early as birth, while with many others, the minimum age may be higher. There are also some that will not allow anyone else to open the account except the child, which will be at the attainment of a certain age, say, 11 years. Therefore, carefully review the terms and conditions of each prospective account provider before making a choice.
How Savings Accounts for Children Work
Many financial institutions, such as banks and credit unions, offer various accounts for young children to learn how to save and spend money wisely. They include prepaid and debit cards for kids and teens, which help them develop good habits for money management. There are also savings accounts for parents to put money aside for the future needs of their children.
Savings accounts for kids often function in a similar manner to those for adults. However, you should check with your bank or savings account provider to know whether they have products for kids and how to open and manage them.
Generally, the presence of a legal guardian or parent is needed to open a savings account for kids. This person is to manage the account for the child at first. But as the kid grows up, they attain the legal age of responsibility, which is usually 18 years, and then become eligible to manage it on their own.
Types of Children’s Savings Accounts
There are different types of children's savings accounts. Some of them allow your child to access their money, while others do not.
The following are the various types of savings accounts for kids:
- Regular savings accounts: This type of account requires the parent or guardian to pay a certain amount of money each month. The money is locked up until the end of an agreed-upon savings term, which is usually a number of years. The interest rate is usually very high.
- Notice savings accounts: In this type, you can save money and have access to it, but you must give sufficient notice to the bank before making a withdrawal. It typically offers a high-interest rate.
- Easy-access savings accounts for children: This type of account allows the guardian or parent to deposit cash and make withdrawals at any time without having to notify the account manager or bank. The interest rate is normally not so high.
- Junior ISAs: A Junior Individual Savings Account (ISA) works very much like the adult type, except that it comes with a lower limit and the money is inaccessible until the child has reached the age of responsibility, which could be 16 or 18, depending on the jurisdiction.
- Fixed-rate bonds: A fixed-rate bond for children requires the parent or guardian to deposit an amount of money in the child’s account and leave it there for about one to five years before they can withdraw from it. Any withdrawal made before the end of the agreement will result in the imposition of a fine or penalty. You can use this type of savings to get a very high-interest rate because the longer the term, the higher the rate.
Deposit Limit on a Kids Savings Account
You may be able to deposit a certain amount of money into a child's savings account. But this depends on the type you choose. When you reach the maximum investment amount for some accounts—which may vary depending on the account in question—you will not be able to deposit any more money. Since many savings accounts for children do not have a maximum deposit or investment limit, you can fund the account with any amount you choose.
Can I Use One Savings Account for Two or More Children?
Savings accounts for kids operate quite similarly to those for adults; thus, they typically have their own unique information, such as account numbers and other personal details. This implies that the only way to save for many children is to create separate savings accounts for each child.
Choosing the Right Savings Account for Kids
There are four factors to consider when choosing a savings account for a child. They are as follows:
When shopping around for the best savings accounts for your kids, ensure to compare the various interest rates. Try to find the bank or financial institution in your country that pays the highest interest on a customer’s deposit.
Fees and terms and conditions
Aside from comparing interest rates, it is also important to read the terms and conditions of the savings accounts. You should try to understand them and see whether you are comfortable with what you are about to agree to in the offer. Look for the monthly fees and any other charges that may apply. Avoid any account that will be costly to operate.
One more factor to consider when opening a kid’s savings account is an investment. Do you want to invest the cash you want to put aside or save it? Your answer to this question will determine which option is more profitable. If you plan to make withdrawals from the account, choose to save, but if you want to lock in the cash for about three years or more, you should choose an investment account for children. The latter option will earn you more interest in return for your money.
Best Savings Accounts and Financial Apps for Children
Below is our list of the best savings accounts you can open for your kids. They offer various benefits that include attractive interest rates, financial literacy for young children, insurance, and secure transactions.
Capital One is a neobank that has been in operation for more than 25 years. It started as a financial corporation that specialised in providing credit cards and developed into an online bank, offering innovative products and services.
The Kids Savings Account from Capital One is a highly rewarding option for parents who want to put money aside for their children’s future. It comes with zero monthly or maintenance fees and no minimum balance requirement. Besides, it provides FDIC insurance up to an allowable limit.
With Capital One, banking for your kids can be a lot of fun because its Kids Savings Account allows you to link your regular bank account to it so that you can make scheduled deposits. You can also open multiple accounts for the financial goals of each of your children. Besides, it offers a 0.3% APY (interest rate) that will keep your deposits growing until the end of the term. Read our overview of Capital One for more information.
Revolut is a financial superapp and neobank. It provides a wealth of products and services, which include multicurrency accounts, international transfers, currency exchange, debit and credit cards, crypto trading, stocks, commodities, and savings vaults.
Parents and guardians can use “Revolut for under-18s” to create a free online account for their youngsters between the ages of 6 and 17. It comes with a contactless card and other fantastic features that can give your kids hands-on experience that produces financial success. While using it, they will develop the right level of independence for making decisions concerning their savings and spending.
Have you been looking for an easy way to teach your kids about money, budgeting, saving, spending, giving, and investing? GoHenry is your sure bet! The app provides accounts for children and parents, allowing its users to enjoy financial independence and peace of mind. Moreover, your deposit is FDIC-insured up to $250,000, and the account is bank-level secured, so you do not need to worry about safety.
The GoHenry app is a platform where the financial education of your child can begin. It contains lessons on how to save and spend wisely. Besides, you can track the progress of your youngster as you use the app to set financial goals and limits and plan for future expenses. Download the app on Google Play and the App Store.
Gimi is an innovative app on a mission to educate millions of children about financial management. It prides itself on being an educational app that parents and guardians can use to teach their kids about saving, spending, earning, and managing money. With Gimi, you can help your kids save automatically and monthly at very low fees. It is better than most modern piggy banks. The app is available on the App Store and Google Play.
Do you have kids aged 3 to 17 and can’t find a suitable financial app for them to learn about savings? Rooster Money could be the solution you need. It is a powerful money app that helps families to train kids as young as 3 years on good habits for success in personal finance management. The app has features such as a Virtual Pocket Money Tracker (for tracking their allowance and spending) and a prepaid debit Rooster Card. Your kids can also learn about interest rates with its Chore Manager feature. This app is easy for parents and fun for kids.
Are Savings Accounts for Kids Taxable?
Whether you will have to pay tax on the interest earned on the savings account you opened for your child depends on some factors. The most significant one is the banking legislation about children’s savings accounts in your country. However, it is common to find that interest earned on non-ISA accounts, whether for children or adults, is taxable by law. Still, you should find out from your prospective savings account provider or local legal practitioner whether the interest on your deposit will be taxed.
Best Junior Cash ISAs for Children (Tax-Free!)
Parents can avoid paying taxes on savings by opening junior cash ISAs for their children. For example, in the United Kingdom, a Junior ISA (JISA) is tax-free savings account that a child's parent or legal guardian opens on their behalf. Each tax year, up to £9,000 can be placed into the account. The money is locked until your child turns 18, which is the legal age when they can manage the account independently. They could use the funds and interest earned to get through college or finance any other personal project.
A Junior Cash ISA can be the best type of savings account for your child. It allows you to earn interest on your deposit without paying taxes.
Yes, you can open a savings account for your grandchild. Note that you will need to provide the child’s birth certificate and proof that you are their grandparent to open the account.
Any parent or legal guardian can open a saving account for kids. Sometimes, grandparents are qualified to put money aside in a children’s savings account to help their grandchildren finance a future project, such as college fees. Notwithstanding, depending on the account provider, with the consent of a parent or legal guardian, a child aged seven and over might be allowed to open savings account for kids.
The best interest rate you can get depends on the type of savings account you want to open. Usually, easy-access and notice savings accounts pay lower interest than fixed-rate accounts and Junior Cash ISAs.
Yes, you can open as many savings accounts as you want for your child. One could be for their future college education and another for their first apartment. But try to use different types of savings accounts to benefit from a mix of easy-access and fixed-rate features.
Yes, potentially. Even if funds kept in a kid's account are the property of the child, if the account allows withdrawals, your ex-partner may be able to have access to the money provided they have the relevant information. In this situation, you might request a temporary account freeze from the bank or building society. It may also be worthwhile to seek expert help for further direction.
Yes, they are generally safe. For example, the Financial Services Compensation Scheme (FSCS) protects money in an authorised UK bank or building society in the United Kingdom. This implies that if the supplier ceases operations, up to £85,000 per person, per institution, is guaranteed.
A child must normally be seven years old or older to open a savings account in their own name. To be sure, verify with the supplier first since this may differ.
Save for Your Youngster’s Future Today!
In this article, we have discussed the best savings accounts for different kinds of people. We would like to encourage you to save for the future projects of your kids with Capital One. It has you covered if you are looking for a savings account that pays interest and offers a thoughtfully designed mobile experience for parents and children. However, there are alternatives that you can use to give your child financial education and help them develop good saving and spending habits. Try them now.