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Banking for kids

Teach your kids good money habits with this kids' banking guide.

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.

While you can open a kids bank account, you’ll need to be a joint owner on the account depending on how young they are. 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.

7 types of kids’ bank accounts

There are several different types of kids bank accounts you could open for your little one:

1. 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.

  • Best for: Parents who want an interactive way for their kids to learn healthy financial habits.
  • Earns interest: No, but some allow you to set up parent-paid interest or reward you with an annual bonus.
  • Common features: Assign chores and pay allowances and control how your child uses their card. Your kid can set savings goals, track their progress and use their card for online and in-store spending.

Learn more about our top picks for kids prepaid debit cards to find the best fit for your family.

2. 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.

  • Best for: Kids who are ready to start spending money with a debit card.
  • Earns interest: Depends on the account
  • Common features: Comes with debit card. Jointly owned between the adult and the child. Child can spend wisely with parent’s supervision. Converts to regular checking account when the child turns 18.

Learn more about the best joint checking accounts for teens, including features and potential monthly fees.

3. 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.

  • Best for: Kids who are ready to have joint access to their savings.
  • Earns interest: Yes
  • Common features: Low fees & minimum opening deposit requirements. Child has joint access with a parent. Converts to regular savings account when child turns 18.

Learn more about the leading savings accounts for kids to set up your little one for financial success.

4. 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 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.

  • Best for: Adults who want to gift their child money that can’t be touched until they turn 18.
  • Earns interest: Usually
  • Common features: Custodian manages account while child is a minor. Converts to regular savings account when they turn 18.

Learn more about how UTMA accounts work with our investing for kids guide.

5. 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.

  • Best for: Parents who want to start saving for their child’s education.
  • Earns interest: Yes
  • Common features: Covers elementary or secondary school expenses or college tuition. Interest and withdrawals are tax free.

6. 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.

  • Best for: Parents who want to leave a financial legacy behind for their kids. Contrary to popular belief, trust funds aren’t just for the ultra-wealthy.
  • Earns interest: Depends on the account
  • Common features: Can hold stocks, bonds, cash and property. Grantor decides how the child can use the trust once they die.

7. Kids’ virtual bank accounts

Kids virtual banks accounts are websites and apps that simulate bank real accounts but don’t involve real money. They’re tools your child can use to learn the basics of banking and money management without any level of risk. Benefits include learning how to budget, understanding the importance of savings goals, and demonstrating how to spend responsibly.

  • Best for: Kids who want to learn healthy financial habits but aren’t ready to graduate to an actual bank account.
  • Earns interest: No
  • Common features: Set financial goals. Simulates real bank accounts without handling real money. Manual way of tracking spending.

WATCH: Which kids’ bank account is best for your kid?

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. But kids under 18 will need a parent or guardian to open the account for them. If you decide to open a bank account for your child, you might want to start with a savings account. Most checking accounts for kids are only offered to teens between 13 and 17 years old. If you want your child to start learning how to manage money across savings and checking accounts, 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 and they’re usually available to kids as young as 5.

Is my child’s information protected under COPPA?

Kids’ personal information is legally protected under the Children’s Information Protection Privacy Rule (COPPA). Any website or online service that caters to children under age 13 must comply with COPPA, which requires that online services only ask for what’s necessary to use their service and get parental consent before collecting information from children.

Companies can volunteer to have their child privacy measures certified through a program called Safe Harbor, showing that they go the extra mile to keep kids’ data safe. While many kids’ cards say they comply with COPPA, Mazoola is currently the only COPPA-certified kids’ debit card platform.

How kids’ banking approaches online privacy

Although information is protected under COPPA, information is still collected and used. We read over 10 privacy policies for kids’ debit cards and found that they typically mention these three items:

  1. Parent’s permission
  2. Kids’ banking apps require a parent to approve collecting a child’s information. For example, Greenlight states that “you consent to our collection and use of the child’s personal information in accordance with this Privacy Statement.”
    Revolut <18 gives a slightly different approach, making parents responsible for any actions or information “as if you had done it yourself.”
    With many apps like Greenlight and Step, teens can initiate the account and invite their parents to finish registering. The information collected doesn’t violate COPPA because COPPA applies to kids under age 13.

  3. The type of information collected
  4. The exact information collected about children varies from app to app. Mazoola encourages parents to use a child’s nickname to protect their privacy. But nearly all apps collect the child’s name, date of birth, gender and parent’s address. There are some like accounts like Revolut <18 that requires parents to verify their child’s identity with an ID or birth certificate. Also, all of the kids’ banking apps we reviewed use anonymous data to see how people use the app. This is called data mining, and it’s typically used to improve marketing or app features.

  5. Where information is shared
  6. Kids’ banking apps interact with other businesses to provide their services, including banks, card processors, shipping and data analytics companies. When it comes to sharing information for marketing, every kids’ banking app is different.
    For example, GoHenry states that information “will be used solely by GoHenry for internal purposes only.” Yet Copper may share with businesses “whose products or services we believe may be of interest to you.”
    If you don’t want your kid’s information shared with third parties, look at the app’s privacy policy to check their marketing practices.

Kids’ banking resources

Explore these useful banking tools and resources for your kids.

    • Kids’ Chore Calculator. If you decide to teach your child the value of a dollar through a chore allowance, use this calculator to determine how much you should pay them based on age and your state.

Kids chore calculator

Calculate how much to pay your kids for completing their chores by selecting your state, child's age, child's savings goal, and chore.

map icon State
kid iconKid's age range
dollar iconKid's weekly savings goal
dollar iconAdd chore
calendar iconWhich days will this chore be completed on?
Chore S M T W T F S Rate
Add chores to work out weekly total
Weekly total $0

Your child is 0% toward their weekly savings goal of $0.

Chore rates are based on suggestions from experts. See our methodology.

Brought to you by GreenLight Logo

Learn more about Greenlight

Learn more about kids’ bank accounts

From opening an account for your newborn baby to saving for college, explore various kids banking topics below.

Compare bank accounts for your baby

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.

529 savings plans

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.

Teen debit cards and bank accounts

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.

How to save for college

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.

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