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Opening a savings account for your child might be one of the most impactful financial moves you make as a parent. It’s not just about stashing away birthday money or allowance — it’s about giving your kid a head start on understanding how money works, how interest grows, and why saving matters long before they’re out on their own.
The good news? Banks and credit unions have gotten much better at offering accounts designed specifically for young savers. The not-so-good news? There are a lot of options, and they’re not all created equal. Some charge fees that eat into small balances. Others have restrictions that make the account practically useless once your teen turns 16.
In this guide, we’ll break down everything you need to know about savings accounts for kids and teens in 2026 — from custodial account basics to the best banks offering youth accounts right now. Whether your child is 5 or 15, there’s an option here that fits.
Why Should You Open a Savings Account for Your Child?
Before diving into specific accounts, let’s talk about why this matters in the first place.
Building Financial Literacy Early
Studies consistently show that kids who learn about money management before age 12 develop stronger financial habits as adults. A savings account gives them a tangible tool to practice with. They can watch their balance grow, understand what interest means, and start making decisions about spending versus saving.
Think about it this way: would you rather your child learn about money through a real savings account with $200 in it, or through their first credit card with a $5,000 limit at age 18? The savings account wins every time.
The Power of Compound Interest Over Time
Even small amounts add up. If you open an account with $100 when your child is born and contribute just $25 a month, they could have well over $6,000 by the time they turn 18 — and that’s before accounting for any interest earned. With a high-yield savings account earning 4% APY or more, the total could be noticeably higher.
The earlier you start, the more time compound interest has to work. It’s a lesson your child can literally watch happen in their account.
Teaching Responsibility and Goal-Setting
A savings account gives kids something concrete to work toward. Maybe your 8-year-old wants a new bike. Maybe your 14-year-old is saving for a car. Having their own account — with their name on it — creates ownership and motivation that a piggy bank simply can’t match.
Types of Savings Accounts for Kids
Not all kids’ savings accounts work the same way. Here’s a breakdown of the main types you’ll encounter.
Custodial Savings Accounts
A custodial savings account is opened by a parent or guardian on behalf of a minor. The adult manages the account until the child reaches the age of majority (18 or 21, depending on your state). At that point, full control transfers to the child.
These are the most common type of kids’ savings accounts. They’re simple, straightforward, and available at most banks and credit unions.
Key features:
- Adult has full control until the child reaches legal age
- The child’s Social Security number is used to open the account
- Interest earned is reported under the child’s tax ID
- No restrictions on how the funds can be used (as long as it benefits the child)
UGMA and UTMA Accounts
UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act) accounts are a specific type of custodial account that allows you to transfer assets to a minor without setting up a formal trust.
UGMA accounts can hold financial assets like cash, stocks, bonds, and mutual funds. UTMA accounts can hold all of those plus real estate, patents, and other types of property. UTMA accounts are available in most states and offer more flexibility.
Here’s what you need to know about UGMA/UTMA accounts:
- Irrevocable gifts: Once you put money into a UGMA/UTMA, you can’t take it back. The money belongs to the child.
- Tax implications: The first $1,300 of unearned income is tax-free for the child in 2026. The next $1,300 is taxed at the child’s rate. Anything above that is taxed at the parent’s rate (the “kiddie tax”).
- Financial aid impact: UGMA/UTMA assets are considered the student’s assets on the FAFSA, which can reduce financial aid eligibility by up to 20% of the asset value.
- Control transfers at majority: Once your child hits 18 or 21 (depending on your state), the money is theirs — no strings attached. They can spend it on college, a car, or anything else they choose.
529 Plans vs. Savings Accounts
You might be wondering how a kids’ savings account compares to a 529 education savings plan. Here’s the quick version:
A 529 plan is specifically for education expenses and offers tax-advantaged growth. A savings account is flexible and can be used for anything. If your goal is specifically college savings, a 529 might be the better vehicle. But for teaching your child about everyday money management, a regular savings account is the way to go.
Many families use both — a 529 for long-term education savings and a custodial savings account for shorter-term goals and financial education.
What to Look for in a Kids’ Savings Account
When comparing accounts, keep these factors in mind.
No Monthly Fees
This is non-negotiable. Kids’ accounts typically have small balances, and a $5 monthly fee on a $100 account is devastating. Look for accounts with zero monthly maintenance fees regardless of balance.
No Minimum Balance Requirements
Some banks require $25, $100, or even $500 to open an account. The best kids’ accounts let you start with as little as $1 — or even $0. A low minimum makes it easy to open the account and start building the saving habit right away.
Competitive Interest Rates
In 2026, high-yield savings accounts are offering APYs of 4% or higher. While many traditional bank kids’ accounts pay much less (sometimes as low as 0.01%), some online banks and credit unions offer youth accounts with genuinely competitive rates.
Even a small difference in APY matters when you’re trying to show your kid that their money is actually growing.
Parental Controls and Monitoring
The best kids’ savings accounts offer tools that let parents monitor transactions, set up automatic transfers, and control how much the child can withdraw. Some even have companion apps designed for younger users.
Educational Features
Some banks go beyond basic account features and include financial literacy tools — things like savings goal trackers, educational content about money, and even rewards for hitting savings milestones.
Best Savings Accounts for Kids and Teens in 2026
Here are the top options worth considering this year.
Capital One Kids Savings Account
Capital One’s kids’ savings account is a standout for families who want simplicity and a solid interest rate.
- APY: Competitive high-yield rate (check current rates at https://www.capitalone.com/)
- Minimum deposit: $0 to open
- Monthly fee: None
- Age range: Under 18 (with a parent as joint owner)
- Highlights: No fees, no minimums, easy-to-use app, and automatic savings tools
The Capital One app lets kids track their savings goals visually, which is a nice touch for younger savers. Parents maintain full visibility and control.
Alliant Credit Union Kids Savings Account
Alliant Credit Union consistently offers some of the best rates in the country, and their kids’ account is no exception.
- APY: Among the highest available for youth accounts
- Minimum deposit: $5
- Monthly fee: None
- Age range: Under 18
- Highlights: High interest rate, $1 minimum to earn interest, nationwide membership available
Alliant is a great choice if maximizing your child’s interest earnings is a priority. You can join the credit union through a partner organization if you don’t meet standard membership requirements. Visit https://www.alliantcreditunion.org/ for details.
Chase First Banking
Chase First Banking is technically a checking account, but it deserves a spot on this list because it’s one of the best tools for teaching kids hands-on money management.
- APY: N/A (this is a checking/debit account, not a savings account)
- Minimum deposit: $0
- Monthly fee: None
- Age range: 6-17
- Highlights: Debit card for kids, parental controls via Chase app, spending alerts, chore tracking
Chase First Banking works best when paired with a Chase savings account. The parent links their Chase account and can set allowances, assign chores, and control where the child’s debit card works. More information at https://www.chase.com/.
Greenlight Savings
Greenlight started as a debit card for kids but has expanded into a full financial platform that includes savings features.
- APY: Parents set the interest rate (Greenlight pays it)
- Minimum deposit: Varies by plan
- Monthly fee: Starts at $4.99/month for the family
- Age range: All ages
- Highlights: Parent-set savings interest, investing features for teens, financial literacy tools, chore management
The unique twist with Greenlight is that parents choose the interest rate their kids earn on savings — Greenlight calls this “Parent-Paid Interest.” You’re essentially paying your child interest out of your own pocket, which can be a powerful teaching tool. Details at https://www.greenlight.com/.
Copper Banking (for Teens)
Copper is designed specifically for teenagers aged 13 and up who want more independence with their money.
- APY: Competitive rate on savings
- Minimum deposit: $0
- Monthly fee: None
- Age range: 13-17
- Highlights: Teen-focused app design, instant money transfers, savings goals, no hidden fees
Copper gives teens a more grown-up banking experience while still keeping parents in the loop. It’s a great stepping stone between a kids’ account and a full adult bank account. Learn more at https://www.getcopper.com/.
USAlliance Financial Youth Savings
USAlliance offers a tiered youth savings program with strong rates.
- APY: Competitive tiered rates for youth
- Minimum deposit: $1
- Monthly fee: None
- Age range: Under 18
- Highlights: No fees, educational resources, credit union benefits
This credit union option is worth exploring if you want a straightforward, high-yield youth savings account. Visit https://www.usalliance.org/ for current rates and membership details.
How to Open a Savings Account for Your Child
The process is straightforward, but here’s what you’ll need.
Documents You’ll Need
- Your child’s Social Security number (required by federal law for tax reporting)
- Your child’s birth certificate or government ID (if they have one)
- Your own government-issued photo ID (driver’s license or passport)
- Proof of your address (utility bill, bank statement, etc.)
- Initial deposit (if required — many accounts allow $0)
Step-by-Step Process
- Choose the right account based on the factors we covered above — fees, interest rates, features, and your child’s age.
- Gather your documents. You’ll need everything listed above.
- Apply online or in person. Most banks let you open kids’ accounts online in about 10 minutes. Some credit unions may require an in-branch visit.
- Fund the account. Make an initial deposit via transfer from your own bank account, cash, or check.
- Set up the app or online access. If the bank offers a youth-facing app, help your child set it up and explore the features together.
- Create a savings plan together. Talk with your child about how much they want to save, what their goals are, and how often they’ll deposit money.
Teaching Kids About Saving: Practical Tips
Opening the account is just the beginning. Here’s how to make it a genuine learning experience.
Start With Clear Goals
Help your child pick a specific savings goal — a toy, a game, a bigger purchase like a bike. Write it down, calculate how long it will take, and track progress together. The more concrete the goal, the more motivated they’ll be.
Make Deposits a Routine
Whether it’s a weekly allowance, birthday money, or earnings from chores, make depositing money into their account a regular habit. Consistency builds the saving muscle.
Show Them Their Interest Earnings
When interest posts to the account, point it out. Explain that the bank is paying them for keeping their money there. Even if it’s just a few cents at first, it’s a powerful concept for a child to grasp.
Let Them Make (Small) Mistakes
If your 10-year-old wants to drain their savings for something you think is a waste of money, consider letting it happen (within reason). The regret of an impulse purchase is a lesson that sticks. They’ll think harder next time.
Gradually Increase Responsibility
As your child gets older, give them more control. A 7-year-old might just watch you make deposits. A 12-year-old can manage their own transfers with your oversight. A 16-year-old can handle the account almost independently.
If you’re looking for more ways to structure your family’s finances, our guide to budgeting methods can help you figure out how much to allocate toward your children’s savings each month.
Tax Considerations for Kids’ Savings Accounts
Yes, even kids have to deal with taxes — at least potentially.
The Kiddie Tax
For 2026, the first $1,300 of a child’s unearned income (interest, dividends, capital gains) is tax-free. The next $1,300 is taxed at the child’s rate. Anything above $2,600 is taxed at the parent’s marginal rate.
For most kids’ savings accounts, the interest earned will be well under $1,300, so taxes won’t be an issue. But if your child has a larger UGMA/UTMA with investments, the kiddie tax could come into play.
Filing Requirements
Your child may need to file a tax return if their unearned income exceeds $1,300. Alternatively, you can include your child’s interest income on your own return using IRS Form 8814, as long as the amount is under $11,500 and meets other requirements.
For a deeper dive into tax planning for your family, check out our tax filing guide.
Impact on Financial Aid
This is a big one for families planning for college. Money in a custodial account (UGMA/UTMA) is considered the student’s asset on the FAFSA, which can reduce financial aid eligibility. Money in a parent-owned 529 plan is considered a parental asset, which has a much smaller impact.
If college financial aid is a concern, you may want to keep large sums in a 529 rather than a custodial savings account.
When Should Your Child Transition to an Adult Account?
Most kids’ savings accounts automatically convert to a standard adult account when the child turns 18 (or sometimes when they turn a specific age set by the bank). Here’s how to plan for that transition.
Before Age 18
- Make sure your teen understands how to manage the account independently
- Discuss the differences between savings and checking accounts
- Talk about the importance of maintaining an emergency fund
- Review any changes in account terms, fees, or interest rates that come with the conversion
At Age 18
- Help them open a checking account if they don’t have one
- Set up a simple budget (our budgeting apps guide can help)
- Discuss building credit responsibly — a secured credit card can be a great first step
- Make sure they understand that UGMA/UTMA funds are now fully theirs to manage
Frequently Asked Questions
Can I open a savings account for my child without their Social Security number?
No. Federal regulations require a Social Security number or Individual Taxpayer Identification Number (ITIN) to open any bank account, including accounts for minors.
What happens to the money if my child doesn’t want the account?
With a custodial account, the money belongs to the child. Once they reach the age of majority, they have full legal control. You cannot reclaim custodial funds.
Can grandparents open a savings account for a grandchild?
Yes, in most cases. Grandparents can open a custodial account for a grandchild, though they’ll typically need the child’s Social Security number and may need the parent’s consent depending on the bank.
Are online savings accounts safe for kids?
Yes. Online banks are FDIC-insured just like traditional banks, meaning deposits are protected up to $250,000 per depositor. The main difference is the lack of physical branches, which some families may prefer for in-person learning opportunities.
How much should I help my child save?
There’s no magic number. The goal is to build the habit, not hit a specific target. Even $5 a week teaches valuable lessons. As your child gets older and earns their own money through part-time jobs or side hustles, they can increase their contributions.
The Bottom Line
Opening a savings account for your child is about much more than the money itself. It’s about building habits, teaching responsibility, and giving them a real-world tool to practice financial skills they’ll use for the rest of their lives.
For younger kids, look for accounts with no fees, low minimums, and parent-friendly controls — Capital One and Alliant Credit Union are excellent starting points. For teens who want more independence, Copper and Chase First Banking offer age-appropriate features that bridge the gap between childhood and adult banking.
Whatever you choose, the most important thing is to start. The earlier your child begins saving — even in small amounts — the stronger their financial foundation will be. And that’s a gift worth far more than whatever’s in the account.