A kids bank account helps build savings and teach your child healthy money habits. But not all accounts will give your child the freedom of managing their money alone. Most bank accounts for kids, like checking and savings accounts, require parents to open it as a joint account.
Savings accounts are a good option if you want to start saving for your baby or if your child isn’t ready to start learning how to manage their own account. But if you want your child to learn the value of saving, spending and giving, consider opening a prepaid debit card for kids. These accounts let you monitor and control your kids’ progress as they develop healthy money habits.
Compare kids’ bank accounts and prepaid cards
Compare top-rated prepaid cards for kids by fees and features. Or, click to the savings account tab and enter your deposit amounts into the table to see how much interest you could rack up with each savings account for your child.
There are six different types of kids bank accounts you could open for your little one:
1. Education savings accounts
Also known as 529 plans, these types of kids bank accounts are set up to save for your child’s future education. The funds from these accounts are to be used solely for educational purposes, be it to cover elementary or secondary school expenses or college tuition. The number one perk of these savings accounts is that the earnings from the investment as well as any withdrawals from the account are not taxable for federal income tax purposes.
2. Custodial accounts
The two most common custodial accounts are Uniform Gifts to Minors Act (UGMA) accounts and Uniform Transfers to Minors Act (UTMA) accounts. Since individuals under the age of 18 aren’t allowed to open savings accounts under federal law, custodial accounts were created. These kid bank accounts are considered to be the minor’s property, but are managed by an adult, the custodian, until they reach the age of maturity. Custodians are not allowed to make withdrawals from for their own benefit. Once the minor reaches the age of 18, the account is usually converted into a regular savings account. Some custodian accounts come with monthly fees, but offer ways to waive them. For instance, Bank of America’s UTMA savings account has an $8 fee that you can avoid by keeping a minimum daily balance of $500.
3. Trust funds
Contrary to popular belief, trust funds aren’t just for the ultra-wealthy. They’re also a great way for average families to ensure their kids make wise financial decisions after they’re gone. There are many different types of trusts, but they usually work like this: the person who sets up the trust is called the grantor. They decide what assets go into the trust, such as stocks, bonds, cash and property. They also decide when and how the beneficiaries get to use the money. When the grantor dies, the appointed trustee makes sure the trust is managed according to plan. Then, when the beneficiary reaches a certain age or milestone, the trustee gives them the money.
4. Joint checking accounts
This is a checking account that is opened up jointly by a minor and an adult — or parent and child. They both have access to the funds in the account, and the money is owned jointly until otherwise specified. With many of these types of kids accounts, banks allow parents to put withdrawal limits on the account and track their child’s spending habits to teach them responsible money habits. Most kids bank accounts, like USAA’s Youth Spending, offer no monthly fees or minimum balance requirements.
5. Savings accounts
Savings accounts like Capital One’s Kids Savings allow kids to learn the importance of saving money and financial responsibility from an early age. Many don’t have minimum opening deposits, and even more have zero monthly maintenance fees, which means your children’s money will earn interest even faster.
6. Prepaid debit cards
Prepaid debit cards for kids allow your little one to spend while you keep an eye on their habits. Most have robust parental controls that let you create chores, pay allowances, set spending restrictions and help them learn the basics of managing money. But prepaid cards for kids don’t earn interest and they typically have monthly fees or one-time card purchase fees.
How to choose a kids bank account?
There are six different types of kids bank accounts you could open for your little one. But the right one for you depends on your child’s age, their financial maturity level and how you want them to use the funds. This table can help you decide which kids bank account you should go with:
Type of account
Best for
Earns interest
Common features
Popular accounts
Education savings account
Parents who want to start saving for their child’s education.
Can be used to cover elementary or secondary school expenses or college tuition
When should I open a kids bank account for my child?
You should open a kids bank account for your child when it’s right for you and your family. If you decide to open a bank account for your child, you might want to start with a savings account. Depending on your child’s age, they might not need a checking account. But once your child grows older, you might want to consider graduating them into a kids prepaid debit card. These cards are created to teach kids how to manage their money.
What is a kids bank account?
A kids bank account is designed to help kids build their savings, learn about money and encourage them to save. One major perk of a kids bank account is that it typically has low to no monthly maintenance fees and no opening deposit minimums.
Best kids bank accounts
There are several different types of kids bank accounts: kids savings accounts, kids debit cards and teen checking accounts. We’ve rounded up the top accounts in each category to help you find the one that’s right for you.
Greenlight is one of the most robust kids debit cards on the market. One of its standout features is that you can control how your child spends their money. For example, if your son is grabbing dinner with friends, you can set a spending limit for a specific restaurant. If you want your daughter to grab a gallon of milk on the way home, you can transfer $5 to her card that can only be used at that grocery store.
Split funds between two categories. Spend Anywhere money can be used at any store, but the other category has parental controls that allow you to set limits for specific stores.
Parent-paid interest. Set up a pseudo savings account for your kid and encourage them to save by paying them interest. It'll compound daily and payout monthly — just like a normal savings account.
Few fees. Greenlight doesn't charge any transaction, reload or withdrawal fees, although you may pay ATM operator fees. If your kid loses their card, the first replacement is free. After that, it's $3.50.
Monthly fee. You'll pay $4.99 a month for Greenlight, but this is a flat fee that includes up to five kid accounts.
Limited direct deposit. If your teen has a job, they can get their paycheck direct deposited onto their Greenlight card, but they can't receive money from Apple Cash, PayPal, Venmo or the US government.
Capital One Kids Savings Account comes with learning tools built into the mobile app to help your child set goals and monitor progress from home or while you're on the go.
No fees or minimums. This account takes easy access to the extreme with no minimum balance requirements and no monthly fees.
Top-rated mobile app. Your child can track their savings from Capital One's mobile banking app. Plus which also features parental controls.
Set up automatic allowances. Make manual deposits into your child's account or have money automatically moved on a schedule — it's up to you.
Must link personal account. You'll need to have a personal Capital One checking account to link to your child's account for deposits. This is a common requirement with kids savings accounts.
Four-day hold on deposits. It can take up to four days for checks and external transfers to clear your account.
The Capital One Money account lets your teen withdraw cash for free at over 39,000 ATMs nationwide. It also has built-in budgeting tools to help them manage their spending and saving money. As a parent, you can give your teen a bonus for reaching their savings goals.
Earns interest. Unlike most checking accounts, this one earns 0.1% APY on your teen's total balance.
No overdraft charges. One disadvantage to teen checking accounts is that your child can rack up overdraft fees if their balance dips below $0. But with Capital One, any purchases that would push their balance in the red are automatically declined.
Budgeting tools. The Capital One mobile app lets your teen set savings goals, track spending and budget money into two categories: Spendable and Set Aside. They can also get a one-time bonus from their parents for reaching a savings goal.
No 24/7 support. Unlike other banks that offer 'round the clock support, Capital One's live chat is limited to business hours and phone support is from 8 a.m. to 11 p.m. ET.
No checks or bill pay. This account doesn't come with a checkbook and your child won't be able to set up bill pay services.
Before you head to the bank and open an account for your kid, learn about the documentation you need to have and how this account could affect you come tax time.
Opening a bank account in your child’s name can be a great way to save for future educational expenses and teach your child good money habits. But not all banks and credit unions allow you to open an account for a baby. Find out which ones you qualify for here.
Education savings accounts, also known as 529 plans, are set up to save for your child’s future education. The funds from these accounts are used to cover educational expenses, such as elementary or secondary school expenses or college tuition. The number one perk of these savings accounts is that the earnings from the investment as well as any withdrawals from the account are not taxable for federal income tax purposes.
Teens can open savings accounts at most banks and credit unions, which can come in handy when they get their first job. Compare top-rated accounts for teens and find out how they compare to prepaid cards and traditional bank accounts.
College gets more expensive every year. The earlier you save, the greater the chance you have to combat student debt in the future. Uncover the average cost of tuition, fees and room and board. Then learn how to create a savings plan that helps your money go further.
Financial literacy programs for kids in the US
There are a host of financial literacy programs available for children in the United States. These programs are designed to educate and engage your child in money-related topics such as saving and budgeting. In addition, each bank offers different rewards and incentives that may be worth considering when looking for a bank account to open for your child.
Program name
Best for
Features
Hands on Banking program
K–12
This program provides free resources for teachers who are looking to add financial lessons in their curriculum. Lesson plans include topics on:
Spending
Saving
Giving
School Savings program
K–12
This program, approved by the US Department of Education, allows kids to make savings deposits at school through Websaver and features:
An online savings register
An animated budgeting app
Prizes for kids who save money throughout the year
Fifth Third Bank Young Bankers Club
Fifth graders
This is a 5- or 10-week program taught inside the classroom. Kids learn how to:
Make basic money calculations
Create and use a budget
Manage a bank account
Navigate the stock market
TD Bank WOW!Zone
K–12
This program provides financial literacy lesson plans to teachers:
Kids 12 and under learn about about the value of money by watching videos, taking quizzes and playing games.
Kids 13 and up learn how to create a budget and develop lifelong saving habits.
Young investors learn about the stock market through a virtual stock market game.
Teach Children to Save Day
K–8
This annual event is put on every April by bank volunteers who teach kids how to:
Cassidy Horton is a writer for Finder, specializing in banking and kids’ debit cards. She’s been featured on Legal Zoom, MSN, and Consolidated Credit and has a Bachelor of Science in Public Relations and a Master of Business Administration from Georgia Southern University. When not writing, you can find her exploring the Pacific Northwest and watching endless reruns of The Office.
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