How to open a savings account for a child

One of the ways you can help kids learn the value of a dollar, delayed rewards, and general money etiquette (while also wasting money on their future) is by setting up a savings account in their name.

This usually involves opening a custody account or joint account that is managed by you but owned by the child. Here’s what you need to know about opening a savings account for a child and the factors to consider when taking this step.

Why should you open a savings account for a child?

Opening a bank account for a child can have immediate and long-term benefits. As mentioned earlier, there is the obvious learning experience that comes with teaching your child how to manage money—and how to save money in particular. This education lays important foundations for your financial growth and journey.

“Research has shown that the path to financial well-being can be taught from a young age by our guardians,” said James Morgan, vice president of savings and deposits at retail bank Capital One. “One of the best tools for teaching kids the importance of finance is to help them open their own savings account.”

In addition to the conceptual value and long-term financial health benefits of opening a savings account for your child, this step also provides an opportunity to engage in regular conversations about money and creates invaluable learning moments.

“It opens the door to important conversations and real-world scenarios about the fundamentals of money — like explaining interest and how it occurs,” says Matt Gromada, executive director and head of youth, family and starter banking at Chase. “Second, it gives your child a sense of independence and freedom and provides opportunities for real-world experiences and learning.”

And that’s not all. There is another advantage. A joint account gives you, as a parent, a sense of security as you can keep track of your child’s money.

Are there savings accounts just for children?

As a rule, minors cannot open a bank account on their own. This is usually prohibited by state law, and where this is not the case, there are often bank regulations on the subject that require an adult or legal guardian to be part of the account.

However, many financial institutions offer accounts designed specifically for children that teach young bankers how to manage money where a parent or guardian shares the account. Some of the best-known options include Chase First Banking (available for children six and older), Alliant Credit Union’s Kids Savings Account, Northpointe Bank’s Kids Savings, and CapitalOne’s Kids Savings.

In many cases, these accounts include access to a mobile app; Some even come with debit cards, offer modest to generous interest rates, and have minimal to no fees.

Steps to open a savings account for minors

The process of setting up a child savings account is fairly straightforward and not too different from opening an account for someone of any age. As a best practice, this effort should always start with doing your homework and finding an account option that appeals to you and fits your child’s financial needs and banking style. After you’ve decided on a specific account, make sure you have all the documentation needed to proceed.

1. Explore your options

There are numerous child savings accounts on the market. So taking the time to research and review your choices can really pay off.

“When looking for a savings account, think about the factors that are important to your family – is there a maximum withdrawal limit? Is the savings account free and without fees? Is there a mobile app with features that allow for easy banking access? Is it insured by the FDIC?” Morgan suggests.

As with any type of deposit account, it’s a good idea to find an option that offers benefits like minimal fees along with generous interest rates.

2. Gather documentation

Similar to any other type of financial account, you will need to provide a variety of documents to open a child savings account. Requirements may vary slightly from financial institution to financial institution, but you will typically be required to provide information about yourself and the minor for whom the account is intended.

“As an adult, you will need identification information such as a driver’s license, passport or government issued ID. You may also need information to identify your child. If they are too young to be licensed, this may include a birth certificate,” says Brittany Pederson, director of deposits and payments at Georgia’s Own Credit Union.

3. Make an initial deposit

Once you’ve selected and set up an account, it’s time to make an initial deposit. You might even want to create recurring automatic deposits from another linked checking or savings account.

At this point, talk to your child about how often they might want or should contribute, how they can earn money for the savings fund, and what goals they might have with it. “Help your child plan what to do with their money,” says Gromada.

What to look for in a savings account for a child?

In addition to the features already mentioned to look out for (e.g. minimal fees and no account balance requirements), some other offers may be particularly suitable for accounts opened for the benefit of minors.

For example, some accounts offer special parental monitoring features that allow tracking where money is being spent and how much is being spent on a single transaction. Some accounts even send text notifications to your phone when a certain spending threshold is exceeded.

It can also be a good idea to find an account that can be linked to your own existing accounts to facilitate transferring funds when needed. Mobile apps linked to the bank account you open can also be a great visual tool for young learners.

“Finding a provider with a modern mobile app capability gives both kids and parents easy banking access and provides instant notifications for all connected phones,” says Morgan.

When opening a savings account for a child, it can also be important to identify a financial institution that has a local physical presence. In this way, you can take your child to the bank and teach them how to make a deposit in an even more practical way.

“Also, you should look for incentives like savings bonuses that are tied to the account,” says Pederson. “Finally, many youth accounts offer free financial education in the form of newsletters, blogs, and videos.”

take that away

Opening a savings account for a child is a valuable step that opens up an opportunity to teach a young banker the importance of deferred payments, how compound interest works, and how to use money responsibly. There are a variety of savings account options for children, and opening these accounts can be done quickly and easily. Before you decide on an account, however, you should shop around and find one that offers the best options for your family’s goals and needs.