Why You Can Trust Us

Investopedia launched in 1999 and has been helping readers find the best kids and teen savings accounts since 2021. We started by identifying more than two dozen banks and credit unions that offer a nationally available youth savings account with an above-average i🐻nterest rate. Beyond the rate, however, we also considered balance requirements, monthly fees, and more. Our unbiased research always aims to provide readers with the best options available, regardless of any affiliate or partner r♋elationships we may have. 

How Does a Savings Account for Kids Work?

Kids savings accounts are a type of custodial account where a cust💞odian— a parent, guardian, or other family member—manages the account on behalf of a minor child. Once the child reaches adulthood—which varies by state but in most states is age 18—they gain ownership of the account. 

Anyone can contribute to these accounts, but the custodian is responsible for managing the account. If an individual makes a contribution or gift to a custodial account, that gift is considered irrevocable, which means that money belongs to the child. In 2025, individuals can make 澳洲幸运5官方开奖结果体彩网:annual gifts of up to $19,000 without being subject to the gift tax.

There are restrictions on what custodians can do with the money in these accounts. According to the laws that govern these accounts, the 澳洲幸运5官方开奖结果体彩网:Uniform Gifts to Minors Act (UGMA) and 澳洲幸运5官方开奖结果体彩网:Uni☂form Transfers to Minors Act (UTMA), the custodian must use the funds in these accounts for the beneꦐfit of the minor. 

Additionally, you or your child may owe tax on the interest earned. This is known as the 澳洲幸运5官方开奖结果体彩网:kiddie tax. The kiddie tax is applicable to children under the age of 18 or full-time students under the age of 24. If your child’s unearned income, like interest and capital gains, is less than $1,350, it won’t be taxed. However, if unearned income is between $1,350 and $2,700, that money will be taxed at your child’s 澳洲幸运5官方开奖结果体彩网:marginal tax rate. If unearned income exceeds $2,700, it’ll be taxed at the custodian’s marginal tax rate.&nb𒆙sp;

Note that the kiddie tax rules may be a bit more complex if your child has earned income (i.e., they earn money from a part-time job or a summer internship).

Common Kids Savings Accounts Terms to൲ Understand

• Annual percentage yield (APY): The APY is the annual rate of return, accounting for 澳洲幸运5官方开奖结果体彩网:compounding. For example, if a savings account offers a 5% APY on your $10,000 balance and is compounded annually, you’d earn $500 after one year. Interest may be compounded daily, weekly, quarterly, or yearly. Note that some banks only offer a higher APY on balances up to a certain amount. Take a bank that offers a 3% APY on balances up to $1,000 and a 1% APY on balances exceeding that amount. That means if you deposited $2,500, you would earn a 3% APY on $1,000 and then a 1% APY on the remaining $1,500. 
• Minimum opening deposit: Some bank accounts require people to deposit a minimum amount of money to open a new account.
• Monthly maintenance fee: To keep an account open, some financial institutions have required monthly fees.
  

How to Open a Savings Account for Kids

1. Compare different accounts: When you’re shopping around for different accounts, consider the APY, the minimum opening deposit, and whether the account has any monthly maintenance fees. You’ll also want to think about how much you plan to deposit, as some accounts may only offer a higher APY on balances up to a certain amount.
2. Gather documents and information: During the application process, parents will typically be required to provide certain information about their child such as their 澳洲幸运5官方开奖结果体彩网:Security Number (SSN) and birthdate. Additionally, parents may be required to provide a valid form of ID like a driver’s license or passport.
3. Apply: When you’re ready, you may be able to apply either online or in person. Just make sure you have all the information you need on hand.

Alternatives to Savings Accounts for Kids

If you want t✨o help your child get a head start on saving, you don’t 💮just have to opt for a savings account. It’s possible to earn a higher return and take advantage of special tax benefits with other types of accounts.

Kids Savin🏅gs Accounts vs. Custodial Brokerage Accounts

Like kids savings accounts, 澳洲幸运5官方开奖结果体彩网:custodial brokerage accounts must be managed by an adult, like a parent, guardian, or other family member. Generally,⛦ these accounts work similarly to kids savings accounts—capital gains may be subject to the kiddie tax and funds must be used for the benefit of the minor.

Yet a custodial brokerage account offers a wide variety of investment options—such as 澳洲幸运5官方开奖结果体彩网:individual stocks, 澳洲幸运5官方开奖结果体彩网:exchange-traded funds (ETFs), 澳洲幸运5官方开奖结果体彩网:mutual funds, and bonds. 

Kids Savings Accounts vs. 529 Savings Plans

If you want to save specifically for your child’s education, consider opening a 澳洲幸运5官方开奖结果体彩网:529 savings plan instead, as these accounts offer special tax advantages. When you use funds from your 529 savings plan for qualified educational expenses—like books, fees, and college tuition—you won’t have to pay federal or state income tax on those distributions. Furthermore, in some states, contributions ma🎀y be deductible from your state income tax.

Another important element of 529 savings plans is that the original owner of the account retains its ownership,🌼 so the account isn’t transferred to the beneficiary once they become an adult. 

Additionally, account own💃ers get more flexibility with a 529 savings plan t😼han with a custodial account. 

With a 529 savings plan, you can change the beneficiary after the account is open. For example, if the original beneficiary doesn’t go to college, the owner can name a new beneficiary who can use the funds for educational expenses. Plus, under new rules, some funds from 529 savings plans may be eligible to be rolled over into 澳洲幸运5官方开奖结果体彩网:Roth IRAs.

How We Find the Best Kids Savings Account Rates

Every business day, Investopedia’s full-time research and compliance teams track the rate data of about 200 banks and credit unions that offer deposit accounts to customers nationwide, including youth savings accounts. To qualify for our lists, an institution must be federally insured (FDIC for banks, NCUA for credit unions), and mu𓆉st offer its products in at least 40 states.

While some credit unions allow you to donate to a specific charity or association in order to join the credit union (e.g., if you don't meet other eligibility criteria such as where you live or work), we exclude from our rankings any credit union whose donation requirement is $40 or more.

Our list of the best kids and teen savings accounts is ranked by APY, and where there is a tie, we 𒆙lead with the account that allows a larger balance to earn the high interest rate. If still a tie, we list institutions alphabetically.