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Can I Open a Savings Account for My Child?

It's never too early to teach your children about financial responsibility, provide them a safe place to keep grandma's birthday gifts, or build a nest egg toward that first car. Opening a children's savings account addresses these issues and helps them earn some interest at the same time.

According to a government survey, 18 percent of 15-year-olds said they did not learn basic financial skills. This can have long-term effects, causing them to make financial decisions as adults that aren't in their best interest, leading to debt and other money problems. Most experts say that kids around age 6 can understand simple banking concepts, so that may be a good time to transition from the piggy bank to the real bank.

Fortunately, many banks and community-oriented credit unions have programs and plans designed to help get your children started on their lifelong financial journey. Find out more about how to open a child’s savings account with this guide.

Where can I open a savings account for my child?

Can I Open a Savings Account for My Child?Most financial institutions have special accounts for children to help teach them about savings. You will have joint ownership on your child's account, allowing you to monitor and manage the money inside. In order to open the account, you'll need your driver's license and Social Security number, in addition to your child's birthdate and Social Security number. Some banks and credit unions may require school ID or another official record for your child. Most child savings accounts have no monthly fees, but some do require a minimum deposit ($5 at Oklahoma Central Credit Union) to open the account. Make sure you sign up your child for the bank's mobile app, giving them a login and password that allows them to access the account. And while most banking is done online, it's also a good lesson to bring them into a branch and learn how to use the teller to make deposits so they are comfortable in that environment.

Are there other ways to teach kids about banking?

Some children's savings accounts also include access to financial literacy programs that teach kids real-world finances and simplify complex money issues. These programs can give kids a first-hand look at:

  • Budgeting
  • Expenses
  • Insurance
  • Credit Cards

The personal, community-first environment at a credit union can also be key to helping young people learn about finance. Employees who have been in the industry for years are more willing to share their experience, advice, and tips to fellow members, even the smallest ones.

What are the earnings for my children's savings account?

Rates vary from one bank to the next, but the annual percentage yield (APY) for online child savings accounts can range from 0.10% all the way to 7.0%. If you are looking to compare youth savings accounts, this is arguably the biggest differentiator from one financial institution to another. Some of the APY percentages are higher for the first $1,000 in the account, for example, and then drop to a more standard rate. Oklahoma Central offers 2.00% APY *  on Kids Club balances $25.00 - $499.99. Find out from your financial institution what balance thresholds the account must meet to qualify for specific APY benefits. This rate may help you determine the best bank for a kid’s savings account.

Are there special teen savings accounts?

Yes, there are specific savings accounts designated for kids ages 13-17. Some financial institutions offer separate child and teen accounts, while others keep everyone under 18 under the same savings plan. Check with your bank or credit union to find out what happens after your child turns 18. Some accounts convert to a regular checking account, while others offer "young adult" benefits that could help your child while in college or the early part of their career.

Can I get a child bank account with a debit card?

Most of the online child savings accounts do come with available debit cards, though some financial institutions will only offer the cards to children 13 and older. Some banks allow you to both monitor the card and set up limits on how much and where your child can use it. You can also set limits on how much money can be taken out of an ATM. Oklahoma Central Credit Union offers free ATM cards (with adult authorization) to account holders 13 and up.

*APY - Annual Percentage Yield effective 12/01/20. $5.00 minimum balance to open account and 2.00% APY earned on balances $25.00-$499.99. Dividends are compounded quarterly and stated rates may change after account opening. Fees could reduce the earnings on the account. Membership conditions may apply.

 

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