How to Open an Account for a Baby
Your child might already know about bank accounts from books or TV. But if they ask where money comes from or how to have their own, it might be time to open a kids savings account.
A kid-focused savings account provides your child with a glimpse into how banks and credit unions work and gives them a place to stash allowance and birthday money. If your child has accumulated funds and you want them to learn about banking, you can give them the opportunity to grow their money in a savings account.
Here are answers to common questions about savings accounts for kids.
Is my child old enough for a savings account?
Generally yes, if you open the account with them. Kids savings accounts typically require a parent or guardian to have joint ownership. That means you can manage the finances until your child is ready to manage them. Because of that setup, your child probably won't have to meet a minimum age requirement to open an account.
There's no need to rush to open one if you feel your child isn't ready, however. A simple piggy bank will probably suffice for most children younger than six.
Which kids savings accounts are best?
Before you open an account, take some time to find the best bank, credit union or online-only bank for your child and you. Keep an eye out for the following:
No minimum balance requirement or monthly maintenance fees: Children should see saving as a good thing and not have fees diminish what they put into their accounts.
An above-average interest rate: The national average savings rate is currently 0.06% annual percentage yield, or APY. At most national banks, savings rates hover around 0%. But many credit unions and online banks offer better rates. The more interest an account earns, the faster your child's bank balance can grow.
Easy online access: Check for features such as mobile apps, the ability to see transactions online and electronic statements. Show your child how to create their own secure password, which will help them learn money management and internet safety.
You can open a savings account for your child, as long as the account is also in your name. Savings rates are typically higher at online banks, so those accounts are worth considering.
LendingClub High-Yield Savings
Min. balance for APY
$2,500
Federally insured by the NCUA
Alliant Credit Union High-Rate Savings
Discover Bank Online Savings
How do I open a kids savings account?
Opening a savings account for your child isn't much different from getting a new account yourself. As the adult, you'll need identifying information, such as a driver's license, passport or other government-issued photo ID. You'll also need to provide basic information for both of you, including your and your child's birthdays and Social Security (or taxpayer identification) numbers.
Some banks will require a minimum opening deposit, such as $25. Others don't have any minimum opening deposit.
Should my child use a banking app?
If your son or daughter is ready to make regular purchases and begin to practice budgeting, a banking app could be a solid option, in addition to a savings account. Kid-focused banking apps have features similar to checking accounts and can generally let minors track spending, set budget goals and set up automatic savings transfers. Some come with access to prepaid debit cards. Parents or guardians can open these accounts on behalf of their children, and are able to set spending limits and keep tabs on purchases.
Lifelong lessons
Prioritizing saving over spending is a valuable life lesson, one that takes time to learn. Opening a savings account for your child is one of the best ways to introduce that concept at an early age.
How to Open an Account for a Baby
Source: https://www.nerdwallet.com/article/banking/opening-child-first-bank-account