Kids Savings Accounts: A Complete Guide

What is a Kids Savings Account?

A kids savings account follows the same principles as an adult savings account, growing money through monthly interest payments on the account’s balance. The most significant difference is because the account holder is a minor, a parent or guardian will need to open the account for the child. 

Kids savings accounts, also known as youth savings accounts, introduce children to financial responsibility. Not to be confused with trust funds or educational savings accounts like 529 plans, the money is accessible at any time to be used for any reason, typically without fees or penalties for withdrawal as long as the account maintains a minimum balance. 

However, kids' savings accounts can be subject to some limits, like requiring a parent's signature for large withdrawals.

Is My Child Old Enough for a Savings Account?

Unlike childrens checking accounts that typically require the account holder to be at least 12 years old, there is no minimum age to open nearly any credit union kids savings account. While opening a kids savings account as a baby shower gift is a little too early, you can usually open a kids savings account as soon as the day they are born.  

With a credit union kids savings account, you can begin to deposit money immediately. Then, once the child is old enough, they'll be able to actively participate in managing their savings account. For example, with a teen savings account, they can: 

• Deposit money.  Whether visiting a branch or using an app, kids can deposit their birthday money or a check for mowing the neighbor’s yard. It’s a hands-on way to familiarize them with the concept of saving. 
  
• View account information. As joint owners, both you and your child can log into an online site or mobile app to view account activity and watch the account’s monthly interest balance grow. 
  
• Withdraw money: When they’re old enough, you might even cosign a secured debit card for your child to withdraw from their kids savings account. Additionally, they can withdraw cash for planned purchases, like a scouts camping trip or the latest must-have gadget.  
  

What Features Should I Look for in a Youth Savings Account?

The best kids savings accounts offer a lot of perks without giving your child too much free rein. The account’s permissions should match your child’s level of responsibility. 

Here are some features to look for in the best savings accounts for kids: 

• Low fees. Fortunately, kids' savings account fees are often low or nonexistent. Credit union kids savings accounts, in particular, typically have no monthly service or account maintenance fees. 
  
• Little-to-no minimum balance. Most credit union kids' savings accounts have a low minimum balance requirement of between $5 and $25. Some credit unions will even cover the minimum deposit as a perk for opening the account! 
  
• Higher interest rate to compound savings. To support kids on their financial journey, many kids' savings accounts will offer a premium interest rate on the first $1,000 or so deposited into the account. Be sure to compare savings interest rates across different account options. 
  
• Flexible Limits. To keep your child from going on an unsanctioned spending spree, look for accounts with kid-friendly limits on withdrawals and the flexibility to change them as your child gets more comfortable with their finances. 
  

How to Open a Kids Savings Account at a Credit Union 

So, is it worth saving with a credit union? We sure think so! After all, while that piggy bank may look cute on your son or daughter’s shelf, it isn’t growing any interest. A youth savings account is a great way to put their money to work! 

Learn how to open a kids savings account at a credit union by following these simple steps:

1. Become a credit union member. If you’re not already a member of your local credit union, you’ll need to join the credit union where you intend to open your child’s savings account because you will be cosigning for the account. Remember, nearly everyone is eligible to join a credit union.
   
2. Set up an appointment. You can open many credit union kids savings accounts online, but if your child is old enough to participate in the experience, consider a more hands-on experience by meeting with a credit union financial advisor who will walk you through opening the account and explain its perks. 
   
3. Fill out an application. You’ll need to complete an application for both you and your child. Remember to bring identification, including your child’s Social Security number and birth certificate, to speed up the process. 
   
4. Start saving! Make a deposit into the account, and interest will begin to accrue immediately.
   

Further Resources on Savings Accounts for Kids

Opening a kids savings account is a smart step in developing children’s financial literacy. Take their education even further with these resources:

• Share these research-backed money skills. The Consumer Financial Protection Bureau offers tips on age-appropriate money milestones. 
  
• Explore financial literacy for all abilities. This guide from Columbia University also includes money management tips for kids with autism. 
  
• Make it a game. Play the NCUA’s World of Cents game with your kids as a fun and practical way to teach them about money.
  

Open a Credit Union Kids Savings Account Today! 

Children reach many milestones on the path to adulthood. Opening a savings account is one that will help keep them on a financially responsible course. And, with their excellent interest rates and member-focused service, a credit union kids savings account is an excellent choice. 

Find a credit union near you with our Credit Union Locator Tool so your child can start saving right away.

Did you know? 

Kids credit union savings accounts are known for having some of the best annual percentage yields (APY) in the country. Unlike banks, not-for-profit credit unions can continually reinvest profits to provide members with top interest rates and other excellent benefits.