The Best Savings Accounts for Kids for 2022 – Investopedia
We recommend the best products through an independent review process, and advertisers do not influence our picks. We may receive compensation if you visit partners we recommend. Read our advertiser disclosure for more info.
Many banks and credit unions offer special kids savings accounts that enable your young child or teen to “level up” from a piggy bank in their bedroom and begin learning how to save and use a bank account. Whether you want to help build your child’s balance or your child needs an account to bank their income from an allowance or a part-time job, a youth savings account provides an opportunity to earn some interest, while also learning how to bank and build a savings habit.
To choose a kids’ savings account, you’ll want to pay attention to the interest rate, any fees or minimum balance requirements, the way you and your child can access the funds, and how the account can grow with them as they mature. We’ve done the research for you, building an expert list that makes it easy to choose a winning account based on what you and your child value most.
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 all-around best youth savings account.
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
Interest rate is lower than other options
Multiple savings goals require opening multiple accounts
No ATM fee refunds on the checking account
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 currently pays 0.30% APY. Though it’s far from 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, to the tune of 0.10% APY.
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 age 13 and up.
See the full Capital One review.
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.
$10 in “birthday bucks” paid every year through age 12
Highly 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
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
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.
Alliant Credit Union
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.
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
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
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 1.60% APY (as of August 2022) 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.
Spectrum Credit Union
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 kids account.
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
No accompanying teen checking account available
Limited to one MySavings Youth Account per individual
Joining the credit union is not free for most people
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 0.40%.
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.
Courtesy of Northpointe Bank
Northpointe Bank’s Kids’ Savings Account is a bit more basic in features than some of the others. But what it has going for it is a high interest rate that’s available with relatively high balances, earning it our award for best youth savings account for substantial savers.
Much better than average interest rate on balances beyond $10,000
Since it’s a bank, requires no membership
Fewer bells and whistles than other accounts
On the first $1,000, some accounts pay more interest
No available teen checking account
For kids and teens with a lot of cash to stash in the bank, it’s hard to earn a great interest rate on all of it, with the highest APYs being capped at low maximum balances. Northpointe Bank takes a different tack, trading fancy account features in exchange for offering a great interest rate not just on low balances, but on high ones, as well, making it our winner for best savings account for kids with substantial savings.
Like some other contenders, Northpointe’s best rate of 1.50% APY is restricted to the first $1,000 in a youth savings account. But while other accounts drop to minuscule APYs after the threshold, Northpointe pays an excellent 1.12% APY on the balance between $1,001 and $9,999.99.
Though a minority of teens will out-save the $10,000 threshold, even above that amount, Northpointe’s rate is more competitive than almost all other youth accounts, paying 2.15% APY on all funds from $10,000 and up.
As a bank, Northpointe doesn’t require meeting membership eligibility requirements, so the process of opening an account is one step simpler. On the negative side, however, it offers no other youth accounts.
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. But there are other winners if you instead prioritize maximizing earned interest, or taking advantage of incentives and rewards that will motivate your child to save more. With our list of category winners, finding the best youth savings account for you and your child should be a snap.
Kids or youth savings accounts are bank or credit union accounts available only to those customers under the age of 21, though sometimes capped at age 12 or 18. The best ones pay higher interest rates than adult accounts as a way to incentivize young savers. However, the balances on which those higher interest rates apply are often capped.
A youth savings account for a child under 18 will always require joint ownership with an adult, generally the child’s parent, grandparent, or guardian. As such, the adult account holder has full access and transactional authority over the account, while the child generally has some limitations on transactions they can conduct.
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 below $2,200 is exempt from the regular income tax under the “Tax On A Child’s Investment And Other Unearned Income” rule, more commonly known as the Kiddie Tax.
Most banks and credit unions, including all of those recommended above, allow online account opening, making it easy to start the process at home and on your schedule. However, because these are accounts for minor children, you (or another adult who will serve as the primary account holder) will also need to apply. So before beginning the online application, have your driver’s license handy.
For accounts held at credit unions, you need to establish membership in the credit union. Often this is done as part of the online application, though occasionally you may need to establish membership first and then come back to open an account. In any case, both the adult account holder and the child will need to apply for credit union membership.
After the account is open, you may need to set up the initial funding as a separate step. This may also involve linking to one of your accounts at another institution. To handle all of these steps, it’s good to allow three to five business days for everything to finalize and for your child’s account to be ready for normal activity.
A clear benefit of establishing a youth savings account is creating a learning opportunity for your child on money management, how to bank, and the importance of saving. Not only can they learn the logistics of how to use a bank account, but they can also begin to appreciate the value of seeing their balance grow, including from earned interest and other rewards.
If you save for your child in a bank account in your own name, they won’t be able to view the account or implement transactions. In addition, the earnings on the account would be taxed at your adult taxpayer rate, diminishing the returns your child can earn on their savings.
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.
Capitol One. “Kids Savings Account.”
Capitol One. “Money Teen Checking Account.”
USAlliance Financial. “MyLife Savings for Kids.”
Alliant Credit Union. “Teach Kids About Money With a Kids Savings Account.”
Alliant Credit Union. “A Teen Checking Account To Guide Them on the Road to Success.”
Spectrum Credit Union. “See Dividends in Action With a MySavings℠ Youth Account.”
Spectrum Credit Union. “Today’s Rates.”
Northpointe Bank. “Deposit Rates.”
Internal Revenue Service. “Topic No. 553 Tax on a Child’s Investment and Other.”
Certificate of Deposits (CDs)
Money Market Account