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How to open a savings account for your child

January 23, 2023, 2:32 PM UTC
Photo illustration of a grandmother, mother, and daughter, counting coins and going over finances.
A savings account for a child can be a valuable way to teach them about money.
Photo illustration by Fortune; Original photo by Getty Images

It’s never too early to begin a child’s financial education.

One of the ways you can help children learn about the value of a dollar, as well as delayed gratification, and overall money management (while also squirreling away funds for their future), is by establishing a savings account in their name. 

Doing so typically involves opening a custodial account or a joint account that’s managed by you but belongs to the child. Here’s what to know about opening this type of savings account for a child and some of 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 already mentioned, there’s the obvious learning experience that comes with teaching your child about money management—and specifically about saving money. This education lays critical groundwork for their financial growth and journey. 

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

In addition to the conceptual value and long term financial health benefits associated with establishing a savings account for your child, taking this step also provides opportunities to have regular money chats and creates invaluable learning moments.

“It opens the door for important conversations and real-world scenarios about the basics of money—such as explaining interest and how it accrues,” says Matt Gromada, managing director, and head of youth, family, and starter banking, at Chase. “Second, it gives your child a sense of independence and freedom, providing opportunity for real-life experiences and learning.”

And that’s still not all. There’s yet another benefit. Having a co-owned account gives you as the parent a sense of security, by allowing you to oversee your child’s money.

Are there savings accounts solely for children? 

Minors generally cannot open a bank account by themselves. Doing so is typically prohibited by state laws and in cases where it’s not, there are often bank regulations on the issue requiring an adult or legal guardian to be a part of the account. 

With that said, however, numerous financial institutions offer accounts that have been designed for children and for teaching young bankers about money with the co-ownership of a parent or legal guardian on the account. Some of the best-known options include Chase First Banking (available to kids as young as six years old), 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, and have minimal to no fees at all. 

Steps to open a savings account for a minor

The process of establishing a savings account for a minor is fairly straightforward and not all that unlike opening an account for someone of any age. As a best practice, this effort should always begin with doing your homework and finding an account option that appeals to you and suits your financial needs for your child and your banking style. Once you’ve decided on a specific account, ensure you have all the appropriate documentation required to proceed.

1. Research your options

There are numerous kids’ savings accounts on the market. So, taking the time to do your research and reviewing the choices can really pay off.

“When looking for a savings account, keep in mind the factors that matter to your family—is there a maximum withdrawal limit? Is the savings account free with no fees? Is there a mobile app with features that allow for easy banking access? Is it insured by the FDIC?” suggests Morgan. 

As with any type of deposit account, it’s a good idea to identify an option that provides benefits such as minimal fees, along with generous interest.

2. Gather documentation

Similar to opening any other type of financial account, you’ll need to provide a variety of documentation in order to open a kid’s savings account. The requirements may vary slightly from one financial institution to the next but you’ll typically be required to provide information about both yourself and the minor for whom the account is intended.

“As the adult, you’ll need identifying information, such as a driver’s license, passport or government-issued ID. You may also need identifying information for your child. If they are too young to have a license, this may include a birth certificate,” says Brittany Pederson, director of deposits and payments for Georgia’s Own Credit Union.  

3. Make an initial deposit 

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

It’s a good idea at this juncture to speak with your child about how often they might want to, or really should, make deposits, as well as how they can earn money to put into their savings fund and even goals they might have for the money. “Help your child plan what they do with their money,” says Gromada.

What to look for in a savings account for a child 

In addition to the features already mentioned that you’ll want to look for (such as minimal fees and no account balance requirements), some other offerings may be particularly suitable for accounts opened to benefit minors.

For instance, some accounts offer special parental monitoring features that allow for tracking where money is being spent and how much is being spent in any single transaction. Some accounts even send text alerts 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 the transfer of money when needed. Mobile apps linked to the bank account you’re opening can also be a great visual tool for young learners. 

“Finding a provider with a modern mobile app feature will allow easy banking access for both kids and parents and provide instant alerts to all linked 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 brick-and-mortar presence. This will allow you to bring your child to the bank and teach them in an even more hands-on way about the process of making a deposit.

“Additionally, look for incentives, such as rewards for saving, associated with the account,” says Pederson. “Finally, many youth accounts offer free financial education in the form of newsletters, blogs, and videos.”

The takeaway 

Opening a savings account for a child is a valuable step, one that opens up the opportunity to teach a young banker about the importance of delayed gratification, how compound interest works, and how to manage money responsibly. There are a variety of savings account options available for kids, and opening these accounts can be done quickly and easily. But before settling on an account, be sure to shop around and find one that offers the best options for your family’s goals and needs.

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