Want to teach your kids good money habits and set them up for success? Laura breaks down three types of kids banking accounts and gives you her recommendations so you'll know what's best for your babies, tweens, teens, and everything in-between!
Hey everyone. And thanks for joining me this week. My name is Laura Adams and I’m a personal finance and small business expert and author. I’ve been hosting the money girl podcast since 2008. And I’m so glad to have you along for the ride. You probably know my mission here is, is to help you get the knowledge and motivation to prioritize your finances, build wealth, and have more security and less stress. Every show is like a mini training that I create to help you come away with tips, advice, and just ways to make better money decisions and take your financial life to the next level. So if you haven’t already subscribed, I hope you’ll do that. And of course, please participate by sending me your money, questions, or comments. The easiest way to do that is by calling our voicemail line, you can leave a message twenty four seven, just call 3 0 2 3 6 4 0 3 0 8.
And you can always email me using my [email protected] Or you can connect with me on Instagram at Laura D. Adams, as always you’ll find the companion blog post for the show. We call it the show notes. They’re in the money girl [email protected] You’ll find today’s episode under number 705. It’s called kids banking three count types. Every parent should consider. I wanted to do this show because I get lots of questions from parents who are looking for ways to help their kids. Not only learn about money, but save their own money. And, uh, maybe help kids save a little bit by, you know, giving them gifts or allowances and that sort of thing. I believe of that. It is never too early to start teaching kids about finances. And I found that there are some really clever and innovative products out there that are designed exclusively for kids.
And they’re pretty amazing because they allow kids not only to improve their financial skills, but to get real world experiences, man money and understanding how accounts work. So I highly recommend everything that we’re gonna talk about today, but I also understand if the thought of giving your child free reign over a bank account might concern you a little. Don’t worry. I do wanna reiterate that one of the benefits of modern banking for kids is that parents can choose the level of control that they wanna have over how their kids use or don’t use the accounts. So if this is something that interests you, whether you’ve got kids or you’re thinking about having kids one day, I hope you’ll stick with me cause I’m gonna cover some account features that might surprise you. We’re gonna cover three types of kids, banking accounts and talk about their innovative features, their pros and their cons.
And hopefully that will help you decide which type might be right for your kid. I think choosing the best bank account can really help you set your kid up for financial success while also giving you confidence that nothing is gonna go wrong. So if you are ready, let’s get to it. So let’s talk about three types of accounts. Uh, you can really just break them down into three main categories, which are banking apps, checking accounts, and savings accounts. So we’re gonna go over each one. So first let’s cover kids banking apps, and I love these because they’re really the most innovative products for kids right now. And since they are relatively new to the financial services scene, you may not know much about them. So I hope that you’ll, you know, really investigate a little bit because they offer a ton of helpful features for parents, including creating chores and automating allowances for kids, setting, spending limits for the apps prepaid card, restricting your child from shopping at specific merchants.
And that’s either online or in person setting a savings account that earns parent paid interest, which is pretty clever and teaching your child how to spend, save, give, and invest wisely. So not only are these fantastic features, but I really love the fact that kids banking apps have a heavy focus on financial literacy, even more so than the other accounts for kids that we’re gonna cover today. Typically the apps are just jam packed with things like interactive quizzes, games and features designed to help your kid learn to manage money wisely. And most kids banking apps also come with a prepaid card. As I mentioned, these allow your child to make purchases locally and online. But the important thing is that unlike a regular debit card, your child cannot overdraft an account with a prepaid card because they can only spend the amount of money that’s loaded onto the card.
They cannot go over what is set on the card. So that’s really kind of an important control. One of my top recommendations for kids in the age range from nine to 14 is an app called green light. This app has every financial education tool you could think of. And it’s really terrific for parents who want maximum control over a kid’s spending. Now there is a fee for it. It costs from $4 and 99 cents up to $9 and 98 cents a month, depending on the plan that you choose. But it does include prepaid cards for up to five kids. Here are some of green lights, innovative features that may interest you. You can set up chores and automate your allowances, right inside the app. You can set spending limits for purchases at specific stores. It pays 1% interest. And, you know, while that’s not a ton, it is more than the other kids’ banking products that we’re gonna talk about in this podcast.
And more than, you know, a lot of other kids banking apps, it gives lots of financial education on spending, saving, and giving through, uh, just a bunch of tools within the app. And it also gives you access to investing tools and free cell phone when you’ve got a premium membership. So if you’ve got a young child, a TW or, you know, like a young teenager, I think those are the kids who could benefit the most from these interactive tools to learn about saving, spending, giving, and investing. So if that’s, you know, your situation and your family, I think green light would be an excellent app for your kids. All right. The second type of kids’ banking product will cover is kids checking accounts. Now the term kids’ checking account can be a little deceiving because most banks don’t offer products for anyone under age 18.
So it’s actually a joint bank account that parent or a legal guardian will co-own with the child. Most banks require the child to be at least 13 years or older. However, there are some exceptions such as the capital one money teen checking account, which is for kids as young as eight, if your child earns their own money, or is you to making purchases or wants to make their own purchases, having a kid’s checking account is an excellent option. It comes with the same features as an adult checking account, such as a free debit card, which allows them to make purchases locally and online. But the most significant drawbacks are that kids checking accounts don’t pay much interest. And they also do not have as many parental controls or financial literacy tools as kids banking apps. So if your child isn’t careful, they could accidentally overdraft their account or even rack up lots of fees.
Like, you know, they could use an ATM a lot and rack up fees if they go over a monthly limit. Now, since you own the account jointly as parent and child, the parent is ultimately gonna be on the hook for any bank fees. Of course. So my top kids checking recommendation is the capital one money account. It’s loaded with benefits. It’s a really great choice. If your child is showing some, you know, financial maturity and they don’t need all the bells and whistles of a kid’s banking app, plus it’s free to open and use a linked debit card. Let me go over some of capital one. Money’s innovative features. They include being available for kids as young as eight. I think that’s, you know, pretty cool. They encourage kids to set saving goals and even track their progress. Plus it does give parental controls, including locking and unlocking a kid’s debit card, monitoring their spending and even setting up automatic payment for allowances.
And there are free ATM withdrawals provided at over 70,000 locations nationwide. So that does give parents, you know, a lot of input, um, in this account versus probably a lot of other kids checking accounts out there. So it’s an excellent choice. If you’ve got a young child, a TW or a teen who wants a convenient way to spend their money and access it using ATMs, but as a parent, you still, you know, want some control over it. All right. The third kids’ banking account are kids’ savings accounts. When many people think of an old school kids’ banking account, they probably have a kid’s savings account in mine, similar to a checking account. It is also a joint account that a parent or a legal guardian will own with the child. And a lot of people don’t realize that you can open one up, no matter a child’s age, they can even be a newborn.
They can be an infant, they just have to have a social security number. Most kids savings are free to open and have no. Then a mom balance requirement. I mean, if you just put in a dollar in the account, you know, that’s okay, but like a kid’s checking account, the interest rate is gonna be pretty meager. Also some banks do require you to be an existing account holder before you can open up a kid savings account. One excellent account to consider is the capital one kids’ savings. Now this does not offer too many financial literacy features, but it does have some tools that will help your child learn the basics. For instance, you can set up and track savings goals and it pays 0.3% interest. So, you know, that allows the child to under understand how interest works. And, you know, just see that they’re earning a little bit of money.
Plus parents can create automatic deposits for allowances or gifts. And with this account, you don’t have to be an existing capital, one customer to open their kids’ savings account. Some of the accounts innovative features that may interest you not charging fees or having minimum balance requirements. As I mentioned, um, creating recurring savings deposits, setting up those savings goals and tracking those goals and even using remote deposit to deposit paper checks that a child receives. So let’s say your child gets a paper check for the holidays or for their birthday. You can show them how to use the savings app to take a picture of that check and deposit it remotely. If you have newborns or kids up to age 17, and you wanna help them save for the future and even create their own savings goals, opening a capital one kid’s savings is the perfect solution.
So now that we’ve covered the three types of kids’ banking accounts, let’s go over a few frequently asked questions about them. Uh, a common question is, well, where can I find the best kids’ accounts? There are lots of places where you can shop for these. You can go to financial comparison sites. Some of my favorites are finder.com and bankrate.com. They will give you tables that compare, uh, you know, all these different accounts side by side. Also, if you’re a member of a local or a national credit union, you might wanna check with your credit union to find out if they offer any kids banking products that would meet your needs. Another question is, what do I need to open a bank account for my child? As I mentioned, you will need your child’s social security number. So, you know, if your child is really young and you haven’t applied for that yet, you wanna to make sure that you do that first before you go for the bank account.
And also you’re gonna need your own identifying information. That includes your address, driver’s license number, birthdate, and social security number. All right. Another question is can I open a kid’s bank account online? Yes. Some kids banking products allow you to open open accounts completely online, and you know, some of ’em don’t even have local branches, but other banks will require you to visit a local branch to open an account. So please keep that in mind, as you shop around, you know, in some cases you may want to take your child to a local branch. That could be part of the learning experience, uh, part opening their account. But if you want the convenience of just doing everything online and you know, doing things via an app, that’s available too, just shop around. All right. Another question. Can a four year old have a bank account?
Yes. You can open a savings account for a young child of any age. However, some banks will request our kids to be at least 13 years old for a checking account, such as the capital one money account that I mentioned. All right. Another question that I hear a lot is will Laura, how much should I be saving or investing for my child? Well, whether you’re thinking about investing for child’s future college expenses, or just, you know, earning money that you want to give them when they become an adult, be sure that those goals never come before your own financial security. In other words, if you don’t have ample savings and you are not contributing at least 10 to 15% of your income regularly for retirement, you afford to invest for a child. And that’s because you may end up needing their financial support in old age.
So only deposit amounts that your budget allows. And you know, if it’s only a dollar or two a week, that’s fine. The goal here is just to get your kids comfortable, managing some amount of money on their own and helping them understand in how different financial products work. And don’t forget that paying an allowance can be an excellent way to teach kids about work and the value of money, and, you know, give them a little something to be putting in their accounts. If you’re interested in more about the topic of saving and investing for kids, you might wanna check out a previous podcast, number 680, called six ways to save and invest money for kids in that show. I review some terrific options that parents have to build financial security for their kids using different tax advantaged and taxable accounts. All right. I hope that helps you understand a little bit about the world of kids banking.
There’s a lot of innovation there a lot going on. So I would encourage you to explore. And if you haven’t joined my free private Facebook group called dominate your dollars yet, what are you waiting for? It’s an amazing group of, of people who are asking fantastic questions, helping other people with answers, reaching their own financial goals, just search for the group on Facebook. Again, it’s dominate your dollars and you can also visit Laura D adams.com where you’ll find my contact page and more about me, my books and online courses. That’s all for now. I’ll talk to you next week until then here’s to living a richer life. Money girl is a quick and dirty tips podcast. It’s audio engineered by Steve Rickie bird with editing by Adam Cecil. Our operations and editorial manager is Michelle Marus. Our assistant manager is Emily Miller and our marketing and public assistant is Devina Tomlin.
It’s never too early to start teaching kids about money. And what better way to help them hone their financial skills and experiences than by helping them open and manage a bank account?
But if the thought of giving your child free reign over a bank account concerns you, don’t worry. One of the benefits of modern banking for kids is that parents can choose the level of control they have over how their kids use (or don’t use) the account.
This post will cover three types of kids banking accounts, including their innovative features, pros, and cons, so you can decide which one may be right for your kiddo. Choosing the best bank account can help you set your kid up for financial success while giving you confidence nothing will go wrong.
3 types of kids banking accounts
You can generally break down kids banking products into three categories: banking apps, checking accounts, and savings accounts. Here’s what you should know about each:
1. Kids banking apps
Let’s start with banking apps because they’re the most innovative products for kids. Since they’re relatively new to the financial services scene, you may not know much about them. But they offer a slew of helpful features for parents, including:
- Creating chores and automating allowances for kids.
- Setting spending limits for the app’s prepaid card.
- Restricting your child from shopping at specific merchants.
- Setting up a savings account that earns parent-paid interest.
- Teaching your child how to spend, save, give, and invest wisely.
Not only are these fantastic features, but I love that kids banking apps have a heavy focus on financial literacy—even more than other accounts for kids that we’ll cover. Typically, the apps are jam-packed with interactive games, quizzes, and features designed to help your kid learn to manage money wisely.
Most kids banking apps also come with a prepaid card, allowing your child to make purchases locally and online. But unlike a regular debit card, your child can’t overdraft their account with a prepaid card—they can only spend the money loaded on the card.
One of my top recommendations for kids ages 9 to 14 is Greenlight. This app has every financial education tool you could think of and is terrific for parents who want maximum control over a kid’s spending. Greenlight costs from $4.99 to $9.98 a month and includes prepaid cards for up to five kids.
Some of Greenlight’s innovative features include:
- Setting chores and automating allowances inside the app.
- Setting spending limits for purchases at specific stores.
- Paying 1% interest (which is more than other typical kids banking products).
- Giving financial education on spending, saving, and giving through various tools.
- Having access to investing tools and free cell phone protection with a Premium membership.
If you have a young child, tween, or teen who could benefit from interactive tools to learn about saving, spending, giving, and investing, then Greenlight is an excellent app for them.
2. Kids checking accounts
The term “kids checking account” can be a little deceiving because most banks don’t offer products for anyone under 18. So, it’s actually a joint bank that a parent or legal guardian co-owns with a child. Most banks require the child to be 13 or older; however, some exceptions are for kids as young as eight.
If your child earns their own money or makes purchases, having a kids checking is an excellent option. It comes with all the same features as an “adult” checking account, such as a free debit card, allowing them to make purchases locally and online.
The most significant drawbacks are that kids checking accounts don’t pay much interest or have as many parental controls or financial literacy tools as kids banking apps. So, if your child isn’t careful, they could accidentally overdraft their account or rack up lots of ATM fees. And since you own the account jointly, parents will be on the hook for any bank fees.
My top kids checking recommendation is Capital One MONEY because it’s loaded with benefits. It’s an excellent choice if your child shows signs of financial maturity and doesn’t need all the bells and whistles of a kids banking app. Plus, it’s free to open and use a linked debit card.
Some of Capital One MONEY’s innovative features include:
- Being available for kids as young as eight.
- Encouraging kids to set savings goals and track their progress
- Giving parental controls, including locking and unlocking a kid’s debit card, monitoring spending, and setting up auto-pay for allowances.
- Providing free ATM withdrawals at over 70,000+ locations nationwide
Capital One MONEY is an excellent choice if you have a young child, tween, or teen who wants a convenient way to spend their money and access it using ATMs.
3. Kids savings accounts
When many people think of an old-school kids banking account, they probably have a kids savings account in mind. It’s a joint account that a parent or legal guardian co-owns with a child. You can open one no matter a child’s age (they can even be an infant) if they have a Social Security number.
Most kids savings are free to open and have no minimum balance requirement. But like a kids checking, the interest rate is meager. Also, some banks require you to be an existing account holder before opening a kids savings account.
An excellent account to consider is the Capital One Kids Savings. While it doesn’t offer many financial literacy features, it does have some tools to help your child learn the basics. For instance, you can set up and track savings goals, and it pays 0.3% interest.
Plus, parents can create automatic deposits for allowances or gifts. And you don’t have to be an existing Capital One customer to open a Kids Savings account.
Here are some of the Capital One Kids Savings innovative features:
- Being available for kids of any age, including newborns.
- Not charging fees or having minimum balance requirements.
- Creating recurring savings deposits.
- Setting up and tracking savings goals.
- Using remote deposit to deposit paper checks a child receives.
If you have newborns or kids up to age 17 and want to help them save for the future and create financial goals, opening a Capital One Kids Savings is the perfect solution.
Frequently asked questions about kids banking accounts
Where can I find the best kids banking accounts?
You can shop kids banking products at financial comparison sites, such as Finder.com and Bankrate.com. If you’re a member of a local or national credit union, find out if it offers kids products that would meet your needs.
What do I need to open a bank account for my child?
You’ll need your child’s Social Security number and identifying information, including your address, driver’s license, birth date, and Social Security number.
Can I open a kids bank account online?
Some kids banking products allow you to open accounts online, while others require you to visit a local branch. So keep that in mind as you shop around.
Can a four-year-old have a bank account?
You can open a savings account for a young child of any age. However, some banks require kids to be at least 13 for a checking account, such as Capital One Kids Savings. And they must be at least 9 to have the Greenlight app.
How much money should I invest for my child?
Whether investing for future college expenses or a gift for a child, those goals should never come before your financial security. In other words, if you don’t have ample savings and aren’t contributing 10% to 15% of your income regularly for retirement, you can’t afford to invest for a child and may end up needing their financial support in your old age.
So only deposit amounts your budget allows. If that’s only $1 or $2 a week, that’s fine. The goal is to get your kids comfortable managing their money and help them understand how different financial products work. And don’t forget that paying an allowance can be an excellent way to teach kids about work and the value of money.
This article originally appeared on Quick and Dirty Tips.
Published by Debt.com, LLC