![]() ![]() Here are a few need-to-know details for anyone considering opening up a savings account for a child: Eligibility and age requirementsīanks and other financial institutions have varying eligibility criteria for kids savings accounts. Main things to know before opening a kids savings account ![]() Carefully review the fee structure of every potential account before signing up for one. Some financial institutions require savers to make a minimum starting deposit or to maintain a certain balance.Ĭustodial accounts require parents to approve or confirm transactions, limiting a child’s access to their funds. In many cases, both you and your child can access their savings account online, which enables kids to monitor their savings and make deposits/withdrawals under parental supervision. Most savings accounts accrue interest over time, which helps kids understand the concept of compound interest while watching their money grow. ![]() Savings accounts let children set financial goals, like saving for a toy, a special event or their future education - all the while instilling a sense of discipline and responsibility. These accounts can serve as a valuable tool for teaching children the importance of saving money, budgeting and making smart financial decisions. Once they’re off to college or a trade school, your child can open up a separate student bank account.Īs with any financial product, savings accounts for kids have both advantages and disadvantages: Pros Explained This option, which is specifically designed for education expenses, lets kids and their parents grow funds tax free (as long as the money is used for qualifying expenses). ![]() If the goal of the account is to help your child save for higher education, you might consider a 529 plan. Some banks and credit unions also offer these types of accounts, and, conversely, some online banks allow kids and their parents to open up joint accounts. They have different tax implications and withdrawal restrictions compared to traditional savings accounts, though, and you’ll probably get a better interest rate if you open an account under your name instead.Īgain, it’s worth doing some research before taking the plunge. Most provide custodial accounts for minors - meaning parents and guardians are the only ones who can access and manage the account until the child turns 18 or 21 (depending on the state).Ĭustodial accounts - also known as Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts - allow parents to open investment accounts for their kids. Online savings accounts continue to grow in popularity, thanks to their convenience and competitive interest rates. Some banks and credit unions also offer interactive tools to help children develop healthy savings habits a useful resource for parents who want to give their kids a comprehensive financial education but don’t know where to start. If you go this route, you and your child will have joint ownership - and shared involvement - of their savings account.īefore opening an account, ask about the minimum opening deposit, monthly maintenance fees, mobile banking availability and whether the account comes with a debit card. These accounts often have lower minimum balance requirements and more affordable maintenance fees than their adult accounts. Most parents who open up a savings account for their kid go through a bank or credit union - often, one they’re already a customer at. Tax-free withdrawals if used for education expenses Similar to traditional savings, except all transactions are online May offer higher interest rates than traditional banks Varies depending on the bank or credit union Ask your bank about high-yield savings accounts for better rates ![]()
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