Parents and guardians have two main choices for opening a savings account for their kid: a joint account or a custodial account. Joint accounts allow both parent and child access to the funds. Custodial accounts for kids mean the account is in the kid’s name, but they won’t get access to the funds until they come of age — and until then, the parent or adult manages the account.
Regardless if you go for a joint account to teach your kiddo more responsibility or a custodial account to manage your little one’s funds for them, look for a savings account with high yields and low fees to better stack earnings.
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8 best savings accounts for kids
The best kids’ savings accounts offer high yields — higher than the national average of 0.40%, as reported by the Federal Deposit Insurance Corporation (FDIC). We’ve gathered the best accounts with high-interest earnings and low fees so young savers can stash away more cash.
The CIT Savings Connect online account offers the highest rate on this list at 4.65% APY – no matter your balance. Parents can open this account online as a custodial account for their kids to grow their savings passively. Compared to other savings accounts, it's a frontrunner thanks to its high rate and the lack of fee and monthly transaction limit. But there's a $100 opening deposit, and while you can't deposit physical cash, you can deposit checks remotely.
Discover avoids as many fees as possible, forgoing its monthly fee and minimum balance requirement. It also doesn't charge for occasionally going over the six-withdrawal limit. Aside from charging $30 for outbound wires, you won't see any other account-specific fees. You'll need to call to set this account up as a custodial account, which gives you control until your child becomes an adult.
Although not a traditional savings account, Step offers an all-in-one account to keep kids' spending and saving money separate. It stands out as one of the few banking apps with no monthly fees. Teens earn up to 5% in savings bonuses on balances up to $250,000 and earn up to 1% cash back. To qualify for both perks, working teens must deposit at least $500 within 30 days each month from an employer or payroll provider. But teens could still get the 1% cashback rewards if they deposit at least $200 each month. Teens can also start building a credit history and access an optional investing program through Step.
Pros
No monthly fee
5% savings reward and cash back with direct deposit
Builds credit history without interest charges
Optional investing platform
Cons
No phone support
APY
5.00% on balances of $0 to $250,000 5% savings reward with $500+ in direct deposits.
If you want a user friendly savings account, Capital One 360 Performance Savings fits the bill. You can open the account and add your teen as a joint owner directly online. Then, open multiple savings accounts for individual goals — and your teen can nickname them to match their goal. They'll also get access to the top-rated mobile app to manage their savings, and Capital One Cafès and branches are available if they ever need in-person help. Capital One does offer a kids' savings account but with a negligible 0.30% APY, so we recommend opening this option as a joint account.
Ally lets you open its savings account as a custodial account during the online application. The account comes with a user-friendly app that lets you setup up to 10 savings goals and track each progress. Plus, if you link your checking account, you can boost your kid's savings by rounding up purchases and sending them the spare change. Ally can also check your linked account for unused money to save, and give your kid customized suggestions to help them save more.
Pros
Automated savings tools
Create savings buckets for goals
24/7 customer service line
Cons
$20 for outgoing wire transfers
No cash deposits
No initial deposit, but you have 30 days to add funds
Alliant Kid's Savings Account earned a spot on our Finder Awards for 2022, earning a competitive 3.1% APY for a kid's account. It's ideal if you want to start your child off with a savings account before opening the Alliant Teen Checking account later. It also comes with an ATM card that you can use to withdraw money from over 80,000 ATMs, a rare feature for any savings account let alone for kids' savings. Although there's a $1 monthly fee, it's waivable when you sign up for e-statements.
While it's a fully digital bank, First Internet Bank makes an effort to put faces with names when you're chatting with customer support. Its site allows you to choose an available customer rep and reach out to them by phone or chat directly. It offers a solid APY of 0.81% — rewardable only after a $100 opening deposit. It also converts to a Free Savings account when your child turns 18 so you don't have to worry about switching to another adult account.
Pros
No monthly fee or minimum balance requirement
Solid 0.81% APY
Direct line to customer support agent
Cons
$100 opening deposit
No cash deposits
Annual Percentage Yield (APY)
0.81%
Interest compounding
Daily
Minimum balance to earn interest
$0
Monthly transaction limit
6
APY
0.81%
Fee
$0
Minimum deposit to open
$100
Best for flexibility
Prime Alliance Bank Personal Savings Account
The Prime Alliance Bank Personal Savings Account is rather standard at first glance when compared to other personal savings accounts. What separates this account from others is the fact that you can make it a joint account or a custodial account. Joint accounts allow both account holders to access the funds, while a custodial account is the property of the child but is managed by the parent or adult. Most other savings accounts only give you the option for one choice, not both. With the flexibility to choose the option that best fits your family, this account also has no monthly maintenance fees or minimum balance requirements and a competitive 4.5% APY (variable) on all balances, it's a top account.
Pros
Choose joint or custodial account option
High 4.5% APY
No monthly maintenance fees or balance requirements
Cons
APY is variable
No information on opening deposit requirements
Annual Percentage Yield (APY)
4.50%
Interest compounding
Daily
Minimum balance to earn interest
$0
Monthly transaction limit
6
Fee per transaction over the limit
$25
APY
4.50%
Fee
$0
Minimum deposit to open
$0
verified_userFDIC Insured
Methodology: How we choose the best kids’ savings accounts
Finder’s banking experts research over 120 kids’ savings accounts to curate a list of the best. As part of the analysis, we also consider all-in-one bank accounts that earn interest or bonuses on money kept in savings. The top accounts must meet the following criteria:
$0 monthly fees or easily avoidable with e-statements
APYs above 0.70%
No more than $100 to open the account
No strict membership requirements
Available in most states
Allows online applications
Must allow you to open as a joint or custodial account
Other kids’ accounts with savings features
Aside from traditional savings accounts, there are a myriad of other kids’ banking apps to consider. These accounts can give kids their own debit card, financial literacy tools, cashback rewards or even savings bonuses that work similarly to an APY.
For savings bonus
Finder Award
Greenlight
4.6
★★★★★
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Get the first 30 days for free. After your one-month trial, plans start at just $4.99/month for the whole family. Includes up to five kids.
Greenlight Savings is a feature housed inside a kids' debit card platform and not an actual savings account. In addition to parent-paid interest, which lets you set how much your kid earns on their savings, Greenlight includes savings bonuses up to 5%, depending on which plan you choose. The Greenlight Core plan lets kids earn a 1% savings bonus per year, while Greenlight Max earns 2% and Greenlight Infinity earns 5% per year. So if your kid has $1,000 in savings, they could earn around $50 in one year with Greenlight Infinity versus $10 with Greenlight Core.
Pros
Earn a 1% to 5% savings bonus
Additional parent-paid interest feature
Curriculum-based financial literacy game
Parent's permission required for savings withdrawals
Cons
Costs $4.99 to $14.98 per month, based on the plan
Savings bonus applies to balances up to $5,000 per family
Monthly fee
$4.99
ATM withdrawal
$0
Card replacement fee
$3.50
Card type
Debit
Card network
Mastercard
Special offer
For each successful referral you or your kid make, you’ll earn a cash bonus and so will your referral.
GoHenry helps kids focus on saving by automating savings from their allowance. If parents set up parent-paid rewards, kids can also get paid for learning about finances through GoHenry's interactive Money Missions games and quizzes. At the same time, parents can limit kids' spending by setting up custom limits.
Pros
Automatic savings from allowance
Financial literacy quizzes
Direct deposits for teens
Cons
Costs $9.98/month for up to four kids
$1.50 fee for ATM withdrawals
Monthly fee
$4.99
ATM withdrawal
$1.50
Card replacement fee
$4.99
Card type
Debit
Card network
Mastercard
Special offer
Get an exclusive 2 months free and $10 allowance when you sign up to GoHenry with Finder's exclusive code: AFFUSFDR10.
Yes, as long as the bank allows you to open it as a joint or custodial account, you can open a traditional savings account on behalf of your child. Choosing a regular savings account lets you take advantage of higher interest rates than many kids’ savings accounts offer.
Narrow down savings accounts for kids APY, minimum deposit and potential earnings. Select the Compare box on up to four accounts to see their features side-by-side.
How to set up a custodial savings account for kids
Adults can set up custodial or joint savings accounts with their child or grandchild, often finding a higher interest rate than with kid-specific savings accounts. To get started:
Call the bank or visit in person. Banks don’t usually advertise which accounts you can open as a custodial or joint account with a minor. Ask a rep about your preferred account to know for sure.
Provide personal information. To apply, you’ll need the name, birthdate and Social Security numbers for both you and your child, as well as your government-issued ID. Give the rep all this information or provide it online if you’re able to use an online application.
Fund your child’s account. You’ll usually provide the account and routing numbers for your checking account along with the dollar amount you’re transferring.
Download the app. You and your child can download the bank’s app to log in and view your child’s balance. Or you might choose to show young kids their balance from your app.
Keep these things in mind before opening a kids’ savings account:
Pros
Reputable accounts insured by the FDIC or NCUA
Sets kids up for financial success
Many are free to open and maintain
Savings accounts are open to kids of all ages
Cons
Many savings accounts don’t have ATM access
The account may change once the child turns 18
Some kid accounts may be subject to kiddie tax
Tax implications of children’s savings accounts
Kids have to pay taxes, too. But because children generally fall into a lower tax bracket than their parents, opening a custodial account in your child’s name reduces the percentage of your savings that goes to Uncle Sam. Keep these tax implications in mind when comparing bank accounts for your child.
The kiddie tax is designed to discourage parents from shifting investments to their children to avoid paying taxes. It applies to all children under the age of 18 or students under the age of 23 whose unearned income — including interest, investments and gifts — exceeds $2,100. The first $1,050 is tax-free, whereas the second $1,050 is taxed at the child’s rate of just 10%. Any amount of unearned income above $2,100 is taxed at the same rate as income in a trust.
With the gift tax, individuals can give up to $15,000 per year or $30,000 for married couples without gift tax implications. For amounts above this limit, a gift tax return must be filed. However, every individual has a lifetime estate and gift tax exemption amount of $5.6 million — or $11.2 million for married couples. This means that even if you exceed the annual gift limit, you may not owe any taxes.
5 kids’ savings account alternatives
Aside from personal savings accounts, parents and guardians can look into other accounts, such as child investment accounts.
UTMA accounts — A Uniform Transfers to Minors Act (UTMA) account is a type of custodial savings account owned by the minor but managed by the custodian. This allows the custodian to make irrevocable deposits of nearly any type of asset into the account.
UGMA accounts — Similar to a UTMA, a Uniform Gift to Minors Act (UGMA) is another type of custodial account that only allows custodians to make deposits in the form of bank deposits, stocks, bonds, mutual funds, other securities and insurance policies.
529 plans — A popular child investment strategy, 529 plans let you choose between a prepaid tuition plan or an education savings plan. They’re sponsored by state agencies and let you set aside funds for your kid’s higher education.
Certificates of deposit — CDs have guaranteed interest rates and earnings as long as you keep your funds in the account for a certain amount of time. Parents and guardians can open these and act as a custodian for their child.
Custodial IRAs — For minors with earned income, parents and guardians can open a tax-advantaged IRA for their kids and act as a custodian until the kid reaches the age of maturity.
Bottom line
The best kids’ savings accounts earn high rates and teach kids how to set goals and manage their money, but it also comes with perks like no fees or minimum balances.
A savings account empowers kids to save, but if you want your child to learn how to safely spend and save, consider other kids’ accounts, such as a checking account or prepaid card.
Bethany Hickey is a personal finance writer at Finder, specializing in banking, lending, insurance, and crypto.
Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt.
Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others.
Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine.
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