Our pick for a kids debit card: Greenlight
Signature Transaction Fee
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- Parent-paid interest
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Every parent wants to teach their kids the value of saving, spending and giving. Thankfully there are banking products out there that let you monitor and control your kids’ progress as they develop good money habits.
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.
There are six different types of kids bank accounts you could open for your little one:
Also known as 529 plans, these types of 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.
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 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.
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.
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 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.
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.
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.
Kids bank accounts are all vastly different. 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.|
|Custodial account||Adults who want to gift their child money that can’t be touched until they turn 18.||Usually|
|Trust funds||Parents who want to leave a financial legacy behind for their kids.||Depends on the account|
|Joint checking accounts||Kids who are ready to start spending money with a debit card.||Depends on the account|
|Savings accounts||Kids who are ready to have joint access to their savings.|
|Prepaid debit cards||Parents who want an interactive way for their kids to learn healthy financial habits.||Parents can:|
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.
From opening an account for your newborn baby to saving for college, explore various kids banking topics below.
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.
There are a host of banking 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|
|Bankaroo||Ages 5 to 14||This virtual bank account helps kids learn the basics about managing money. It’s only a simulation, so your child won’t be handling real cash. It’s best for kids who aren’t ready to graduate to a real kids bank account. Bankaroo teaches kids how to:|
|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:|
|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:|
|Fifth Third Bank Young Bankers Club||Fifth graders||This is a 5- or 10-week program taught inside the classroom. Kids learn how to:|
|TD Bank WOW!Zone||K–12||This program provides financial literacy lesson plans to teachers:|
|Teach Children to Save Day||K–8||This annual event is put on every April by bank volunteers who teach kids how to:|
A bank account for kids that helps your child develop healthy money habits early on. Powered by Greenlight.
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