Savings Accounts for Kids

It’s never too late (or too early) to start kids on the path to saving. Aside from passive saving, where parents put aside money, active savings, where kids participate in the process provides valuable learning opportunities.

My daughter is 3-years-old and we have a piggy bank on her dresser. When someone gives her cash, we allow her to place it in the bank, which she thinks is fun. When the bank is full, we take one of her little purses and put all of the money into it, then let her hold it in the car (believe it or not, she thinks this is an adventure and a treat).

She holds her purse very properly like a “big girl” and goes with us to the bank. Then, she enjoys handing over her savings to the teller, who puts it in her account.

We always let her keep $5, then we take her to the ice cream store, where she purchases her favorite flavor (she’s a die-hard fan of soft vanilla ice cream with rainbow sprinkles). We coach her to say “please” when she makes her request, and when the change is handed over, she usually remembers to say, “thank you.”

It’s a fun way to handle an otherwise mundane bank run, but it’s also teaching her the process of putting money away.

Many banks are kid-friendly and have specific accounts for children. Some features that you want to look for include:

• No or very low minimums to start the account. Don’t shoot yourself in the foot and wait until the kid amasses a fortune.
• Interest. Interest rates are very low right now, so it won’t be much, but as time goes by kids can watch their money grow and compound interest is a good concept to understand.
• Online transfer access. All banks seem to offer this, but it’s worth mentioning. When kids clear the minimum hurdles to transfer money into CDs, it’s a low-risk, higher interest way to help savings grow.

Here are some local banks that have kid-friendly products that are worth investigating:

Bank: Peapack-Gladstone Bank - Warren Branch
Address: 58 Mountain Boulevard, Warren, NJ
Phone: (908) 757-2805
Product: Pony Club Savings. Available to children under age 22. $10 minimum. ATM card available to members 18 years of age or older. Quarterly statements. Interest compounded and credited quarterly.

Bank: Skylands Bank
Address: 34 Mountain Blvd # 1, Warren, NJ
Phone: (908) 757-9444
Product: Student Statement Savings. Available for students up to age 22. No minimum daily balance requirement. $0 monthly service fee. Free online banking. Competitive interest rate.

Bank: TD Bank
Address: 63 Mountain Boulevard, Warren, NJ
Phone: (908) 561-6271 
Product: Young Saver. No minimum initial deposit required to open account. Interest-bearing. No monthly maintenance fee, for those under 18 and free for those over 18 if you meet the $250 minimum daily balance requirement. Free online statements.