Piggy banks are a rite of passage for children. But there comes a time when children need to learn there's more to a healthy financial life than putting spare change in their ceramic animal. Otherwise, they'll turn into adults who hide money under their mattresses or bury jars of coins in their backyards, and they'll lose the power of drawing interest.
They need to learn about the benefits of banks at some point, and that's a lesson best introduced while they are still young. It can spark a love of finances in your child. You could be spawning the next Warren Buffet — you never know what lessons will take root in a child's mind.
Since you're a teacher now, let's help you prepare your lesson plan by looking at the best bank accounts for your children.
Factors You Should Look For
Bank offers fluctuate all the time. That's why you have to know what to look for so you can score the best bank account offer when you're ready. These are some of the things you can look at to find a good deal:
- How much interest it pays:
If your child is saving their money, you'll want them to get as much interest as they can. You'll have to do some shopping around to find the best deal. Look at both online banks and brick-and-mortar institutions.
- Consider your own bank:
Your bank might not pay the most interest compared to some other lenders, but you'll love the convenience. You'll be able to transfer funds with the click of a button from your account to theirs, and you'll have online access to their account without setting anything else up.
- If you want a passbook:
It can be exciting for your child to track their deposits with a passbook. It can give them tangible proof of their account because, for younger children, seeing that balance online isn't the same as having it in their hands. Problem is, not all banks still give their customers passbooks since we're in the digital age now. If that is a big deal to you, ask the bank you're considering if they'll provide one.
- Inactivity fees:
Unless you give your child an allowance or they are a teenager with a job, they won't be making frequent deposits to their account. Some banks charge inactivity fees if a customer doesn't deposit money often enough. You might want to find a bank without inactivity fees or make sure you put a little money in that account so your child doesn't get socked with these.
- The age of your child:
Your child's age matters greatly. Older children may prefer an online account that earns them the most interest, while younger children may like being able to visit their bank.
- Look for freebies:
Some banks give out gifts like free piggy banks to children who set up an account with them. Free gifts? Every child will love that.
- How often you plan to withdraw:
Older children will want to take some money out of their accounts once in a while. And, even though it will eat away their savings, you should let them. It can teach them to save up for the big purchases they'll need to make later in life, like their first car or home. But some plans, like the Minor Savings Account from Bank of America, will charge a fee if you make too many transfers or withdrawals per month.
- Their starting balance:
Some savings accounts will implement a monthly fee if the account holder is under a certain balance. You'll have to make sure you have an initial deposit for at least that much to avoid fees.
Accounts To Consider
Here are some current offers you might want to check out as possibilities for starting your child's account.
Capital One Kids Savings Account
This account pays an annual percentage yield of 1%. That's a pretty great rate for a children's savings account. But there is more to love about this account than just the APY — there are no fees, and there isn't a minimum balance requirement. If your child has $10 in their piggy bank you can start an account with that much and not worry about losing the whole amount to fees.
Your child will be able to check their balance online whenever they want. There is a limit with this account to six withdrawals allowed each month.
Alliant Credit Union Savings Account
If you're all about the Benjamins, you'll want an account for your child with the highest APY you can find. That's where Alliant shines with its 2% APY. One thing to be aware of, however, is that your child will only earn that interest if they have a minimum of $100 in their account.
It's a free account as long as you opt for electronic statements.
The biggest drawback to this account is you can't open it unless you're a member, but a lot of people qualify for membership based on one of these factors:
- You're an employee or former employee of one of the businesses they partner with.
- You're a member of an organization they partner with.
- A family member of yours is a current Alliant member.
- You support their partner charity, Foster Care to Success.
- You live or are employed in a community near their Chicago corporate headquarters.
Bank of America Minor Savings Account
The APY for this account, at .03% is pretty awful, but there are so many Bank of America locations, if you're looking for a brick-and-mortar option, this would be highly accessible.
The minimum opening deposit is $25, which isn't out of reach for most children. They won't have monthly maintenance fees if they are under 18. Only six transfers and withdrawals are allowed each month, though, without a fee being applied.
Golden 1 Credit Union Youth Savings Account
The interest you'll get with this isn't great — the current APY stands at .15%. The thing that is attractive about this account is that your child will only need $1 to open it. Plus, there is no monthly service charge to have this account.
Your child will also receive a monthly account statement, which could motivate them to save more money.