With so many banks in business, not all savings accounts are created equal, especially when it comes to kids. To get a good arrangement, you’ll need to shop around with your child. The exact features you sign up for can vary depending on your situation, but these specific elements are particularly good to grab if you can.
1) Zero or near zero fees
Extra charges can eat into the little money your child might deposit very quickly. Maintenance fees are probably the most common ones to watch out for, but look out for hits for inactivity, too.
2) No minimum balance requirements
The majority of kids are not going to have incomes that are large or steady enough to support a minimum balance requirement on a bank account. They also don’t have extra funds to cover the fees that often come with dipping below the minimum.
3) Good proximity of the bank
The closer your child’s institution is to your house, the more likely it is you’ll actually take your kid there and that he or she will develop both good rapport and solid banking habits. As you consider where your child’s bank is, look at the location and density of fee-free ATMs—an account with an ATM card gives your child more access and control over his or her money.
4) Dual in-person and online accessibility
In-person accessibility to a savings account gives a child more physical, hands-on experiences with the bank. They can easily ask questions or make changes to their account as needed. Online accessibility is important, as well, however, as being able to check the account at any time from anywhere can keep your kid from making a money blunder. Working with money electronically early also prepares them for the way most organizations and businesses these days handle transactions
5) A decent interest rate
When your child opens a savings account, he or she is essentially a lender to the bank, which uses the money to do things like provide loans. To compensate for the risk involved in this, most banks offer interest. True enough, the risk is low and the interest provided thus is not very high, but if you shop around, you can find an account with a competitive rate that lets your child earn a little “free” money, introducing long-term investment.
6) Online statements
Even though getting a paper statement can be exciting, a hard copy of your child’s bank record can be tough to keep track of and contributes to clutter. Banks also are charging fees to send out paper statements in many instances. Go paperless to keep your child organized and stop the bank from hitting your kid’s account.
7) Savings incentives
Many banks will offer kids savings incentives for having an account, such as depositing $1 for every $25 saved. These institutions know that kids are the next generation of loyal customers, so they try to stay competitive in what they provide, hoping to snag future business.
8) A connection to you
If you have parental access to your child’s account, you can review the account activity together with your child. You’ll keep your child honest, heading off errors, and your kid will learn to see you as a support source.
9) Account structuring
Some banks allow kids to structure their savings accounts, meaning your child can split what they save into different “buckets,” just like they would at home with jars or piggy banks. This division makes it much easier for your child to track funds for multiple savings goals they might have.
10) Extra services
Extras on a kid’s savings account might include things like a weekly email with a money game or free access to the bank’s money education website. These services can help drive money points home, often providing good practice with money tasks or concepts.
A savings account is a natural step up from at-home savings jars or piggy banks, but you need to shop around to find one that will truly support financial literacy. Take your time when searching and keep your child involved through the search process. With patience, you’ll find a bank that provides excellent service and education.