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Best savings accounts for kids

Some are better than others for teaching children about financial responsibility.

By Karen Datko May 7, 2010 9:05AM

This post comes from partner blog The Dough Roller.


One of the greatest gifts we can give a child is to teach financial responsibility at a young age. And a savings account for children can go a long way in this effort. As my wife and I raise our two kids, now both teenagers, we can see just how important it is that kids understand basic money-management skills.

The right type of online savings account for a child can help teach children several important financial lessons:

  • The power of compound interest. While perhaps urban legend, Einstein is said to have quipped, “The most powerful force in the universe is compound interest.” Watching a savings account grow through compound interest can help teach a child the importance and benefits of saving and investing at an early age.
  • Setting and achieving goals. Setting goals helps us think well beyond the moment. Financially speaking, consistent goal setting can help anybody achieve a greater level of financial freedom and wealth.
  • The importance of saving. Instilling in our children the habit of saving money can help them avoid a lot of grief later in life. Teach a child this lesson early in life, and they are far more likely to maintain the habit of saving when they are older.

Let’s turn to some of the best savings accounts for kids. When we compiled this list, we considered several factors:

  • Interest rate. A high-interest savings account can help a child understand the importance of finding the best deals. While the interest rate isn’t the only consideration, it’s obviously an important one.
  • Low fees. With many bank accounts for kids, the amount of money saved will be relatively small, at least to start. The last thing you want are fees eating away at the balance.
  • Low minimum balance. Some banks either require a substantial minimum balance or charge extra fees if a certain balance is not maintained. Unless your child’s bank account will exceed these minimums, it’s best to avoid those accounts.
  • Fun. Yes, a bank account can be fun. And particularly for young children, the fun factor can go a long way in teaching kids about money.

With these criteria in mind, here are our top choices for the best child savings accounts:


SmartyPig. Without question this is our No. 1 pick. It offers one of the highest rates of any online savings account (currently 2.01% APY, but soon to go to 2.15%). Savings are FDIC-insured up to the applicable FDIC insurance limits. There are no monthly fees, and the initial deposit is just $25. But that’s not what sets SmartyPig apart from other savings account options for kids.


SmartyPig is not just a savings account that accepts deposits and withdrawals. Instead, account holders set up savings goals, and then contribute money to their account to reach them. A savings goal must be at least $250 and can go as high as $250,000. This is a great way to teach a child the importance of setting goals. And you can even involve friends and family members, as they can contribute money toward the child’s goal.

On top of that, SmartyPig is fun, and that’s important when you are trying to teach and motivate a child.


Sallie Mae. As much as we like SmartyPig, you may be looking for a more traditional banking experience. There are several good options in this category, and Sallie Mae is high on the list. Why? Simplicity and high rates. Sallie Mae currently pays 1.40% APY on a savings account, making it one of the highest savings account rates available. There are no monthly fees or minimums, which makes it ideal for a child’s account. And if you take advantage of Upromise, Sallie Mae will throw in a 10% annual match on Upromise earnings (subject to certain requirements and limitations, of course).

ING Direct. This is the account we used with our children. ING Direct does not charge fees or require a minimum balance. We’ve found the website to be extremely easy to use. And our kids were familiar with the Orange savings account and logo. On top of that, ING offers a referral program that enabled our children to make a few dollars when friends and family signed up for an ING Direct account.


Ally Bank. Finally, we include Ally Bank in our list for several reasons. First, it has no minimums and no monthly fees. Seconds, it offers extremely competitive interest rates. And finally, it has a wide selection of savings products. In addition to a simple online savings account, Ally Bank offers a variety of certificates of deposit, including the Raise Your Rate CD and a no-penalty CD. As a result, Ally Bank is a great choice for older children, and could certainly become their bank of choice when they move out of the house.


The above are online banking options for children. Of course, you can always choose a local bank, and many offer special programs for kids. The downside is that interest rates usually aren’t as high as they are with online banks. Whatever you choose, the key is to make savings fun and consistent. And depending on the age of your child, consider involving them in choosing the bank.


Related reading at The Dough Roller:



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