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.
Why trust Finder
- 300+ banks and credit unions reviewed
- 30+ kids' cards analyzed and rated by our team of experts
- Evaluated under our unbiased rating system covering 8 categories
- 20+ years of combined experience covering financial topics
We're big on editorial independence. That means our content, reviews and ratings are fair, accurate and trustworthy. We don't let advertisers or partners sway our opinions. Our financial experts put in the hard work, spending hours researching and analyzing hundreds of products based on data-driven methodologies to find the best accounts and providers for you. Explore our editorial guidelines to see how we work.
<h3>8 best savings accounts for kids</h3>
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.
<ul>
<li><b>Best overall</b>: <a class=”scroll” href=”#cit”>CIT Savings Connect</a></li>
<li><b>Best for few fees</b>: <a class=”scroll” href=”#discover”>Discover® Online Savings Account</a></li>
<li><b>Best for spending and saving</b>: <a class=”scroll” href=”#step”>Step Visa Card</a></li>
<li><b>Best for teens</b>: <a class=”scroll” href=”#capital”>Capital One 360 Performance Savings</a></li>
<li><b>Best for savings roundups</b>: <a class=”scroll” href=”#ally”>Ally Bank Savings Account</a></li>
<li><b>Best for growing with your child</b>: <a class=”scroll” href=”#alliantkids”>Alliant Kids Savings Account</a></li>
<li><b>Best for customer support</b>: <a class=”scroll” href=”#first”>First Internet Bank Tomorrow’s Tycoons</a></li>
<li><b>Best for flexibility</b>: <a class=”scroll” href=”#prime”>Prime Alliance Bank Personal Savings Account</a></li>
</ul>
<div id=”cit”></div>
<h4>Best overall</h4>
<div id=”discover”></div>
<h4>Best for few fees</h4>
<h4>Best for spending and saving</h4>
<div id=”step”></div>
<div id=”capital”></div>
<h4>Best for teens</h4>
<div id=”ally”></div>
<h4>Best for savings roundups</h4>
<div id=”alliantkids”></div>
<h4>Best for growing with your child</h4>
<div id=”first”></div>
<h4>Best for customer support</h4>
<div id=”prime”></div>
<h4>Best for flexibility</h4>
<h3>Methodology: How we choose the best kids’ savings accounts</h3>
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:
<ul>
<li>$0 monthly fees or easily avoidable with e-statements</li>
<li>APYs above 0.70%</li>
<li>No more than $100 to open the account</li>
<li>No strict membership requirements</li>
<li>Available in most states</li>
<li>Allows online applications</li>
<li>Must allow you to open as a joint or custodial account</li>
</ul>
<h3>Other kids’ accounts with savings features</h3>
Aside from traditional savings accounts, there are a myriad of other kids’ banking apps to consider. These accounts can give kids <a href=”https://www.finder.com/kids-banking/debit-cards-for-kids”>their own debit card</a>, financial literacy tools, cashback rewards or even savings bonuses that work similarly to an APY.
<h4>For savings bonus</h4>
<div id=”greenlight”></div>
<h4>For learning about saving</h4>
<div id=”gohenry”></div>
<h3>Can I open a regular savings account for my kid?</h3>
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.
<h3>Compare savings accounts for kids</h3>
Narrow down savings accounts for kids APY, minimum deposit and potential earnings. Select the <strong>Compare</strong> box on up to four accounts to see their features side-by-side.
<h3>How to set up a custodial savings account for kids</h3>
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:
<ul>
<li><strong>Call the bank or visit in person</strong>. 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.</li>
<li><strong>Provide personal information</strong>. 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.</li>
<li><strong>Fund your child’s account</strong>. You’ll usually provide the account and routing numbers for your checking account along with the dollar amount you’re transferring.</li>
<li><strong>Download the app</strong>. 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.</li>
</ul>
<h3>Pros and cons of kids’ savings accounts</h3>
Keep these things in mind before opening a kids’ savings account:
<div class=”u-grid”>
<div class=”u-grid__col u-1/2@m”>
<h4>Pros</h4>
<ul class=”list-1″>
<li>Reputable accounts insured by the FDIC or NCUA</li>
<li>Sets kids up for financial success</li>
<li>Many are free to open and maintain</li>
<li>Savings accounts are open to kids of all ages </li>
</ul>
</div>
<div class=”u-grid__col u-1/2@m”>
<h4>Cons</h4>
<ul class=”list-12″>
<li>Many savings accounts don’t have ATM access</li>
<li>The account may change once the child turns 18</li>
<li>Some kid accounts may be subject to kiddie tax</li>
</ul>
</div>
</div>
<h3>Tax implications of children’s savings accounts</h3>
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.
<ul>
<li><strong>The kiddie tax</strong> 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.</li>
<li><strong>With the gift tax</strong>, 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.</li>
</ul>
<h3>5 kids’ savings account alternatives</h3>
Aside from personal savings accounts, parents and guardians can look into other accounts, such as <a href=”https://www.finder.com/kids-banking/investing-for-kids”>child investment accounts</a>.
<ul>
<li><strong>UTMA accounts</strong> — 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.</li>
<li><strong>UGMA accounts</strong> — 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.</li>
<li><strong>529 plans</strong> — 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.</li>
<li><strong>Certificates of deposit</strong> — 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.</li>
<li><strong>Custodial IRAs</strong> — 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. </li>
</ul>
<h3>Bottom line</h3>
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 <a href=”https://www.finder.com/kids-banking”>kids’ accounts</a>, such as a checking account or prepaid card.
