Best Savings Accounts for Kids

Best Savings Accounts for Kids

You want to open a savings account for your child, but you aren’t sure where you should do it. Is there a difference between opening an account at a bank versus a credit union? What type of benefits can you find at a credit union that you might not get at a bank? And can you switch a custodial account to a regular account?

We can help you navigate through these questions as you attempt to find the best savings account for your child. Read on to learn the advantages of opening a savings account for your child with PSECU.

Should You Open a Savings Account for Your Child?

First, you may be wondering whether you should even look into opening an account for your child. Savings accounts offer a chance to save for:

  • Higher education
  • Special events, such as a field trip
  • High school events or big purchases for your child
  • Emergencies

Many people choose to open a savings account in their child’s name as soon as they’re born, while others wait until they feel their child is old enough to have input on the account. Whatever your reasoning, having money in your child’s name can help them learn fiscal responsibility and teach them about the importance of saving money early.

Check out this post for more tips on how to teach your child good money management.

Does PSECU Offer Savings Accounts for Children?

How do you choose the best savings account for your child? You should start by looking at options offered by financial institutions that you trust.

At PSECU, we currently offer a special higher-yield dividend rate for accounts opened for, or owned by, those under the age of 18. As with other PSECU savings accounts, a $5 deposit is needed to open the account. Then the account can earn 1.00% Annual Percentage Yield (APY) on savings account balances of up to $500.00. If their balance goes above $500.00, the remainder of the balance above $500.00 will earn dividends based on our Regular share rate. There is no fee to open the account and no monthly account fees.

The age of your child determines which types of accounts they’re eligible for.


Children under the age of 13 can have a custodial account. Parents, guardians, or other family members over the age of 18 can open custodial accounts for a minor. The money in these custodial accounts belongs to the minor. However, the custodian makes the withdrawals and deposits.

Teens 13 and above can still have custodial accounts (until they turn 21); however, they’re also eligible to open their own account without a custodian. These are called regular accounts. While a custodian is not required on these accounts, a parent or guardian can be added as a joint owner if they’d like to view the teen’s banking activity until they’re old enough to manage their finances on their own.

Why Open Your Child’s Bank Account With a Credit Union?

When you open a savings account for your child, you want to find the one that offers the best return on your money and no fees.

Credit unions like PSECU offer a return on investment on savings accounts that banks often do not. This is because when you open an account at a credit union, like PSECU, you become a part-owner. In addition to being member-owned, credit unions are not-for-profits, a status that drives us to return surplus earnings back to our members.

Here are a few more reasons why opening your child’s account at PSECU may be one of the best choices for you:

1. Higher-Yield Dividend Rate on Savings Accounts

As described above,  PSECU offers a higher-yield dividend rate on accounts owned by those under the age of 18.

2. No Fees for Savings Accounts

Banks typically charge higher fees for maintaining a savings account. They may also impose requirements such as making minimum monthly contributions or maintaining a minimum balance to avoid fees. For children’s savings accounts, they’ll often charge a fee when the child has reached a certain age and the account needs to be transitioned to a regular savings account.

As PSECU, there are no monthly account fees, whether your child has a custodial or regular account. We require only a minimum $5 balance to maintain your account.

3. Benefits of Banking with PSECU

At PSECU, we believe in the children who will lead us in the future. That’s why, in addition to our youth accounts, we hold an annual scholarship competition for our members to help them fund their college education and concentrate on their studies. Another benefit of opening your child’s savings account with us is gaining eligibility for these scholarships. We award six of them each year.

For more money-saving tips, visit our WalletWorks page.

Open a Youth Account

*APY denotes Annual Percentage Yield. To be eligible for the Youth Savings rate, the primary account owner must be under the age of 18. All eligible Regular Savings Share accounts earn 1.00% APY for balances of $.01 to $500.00. For balances of $500.01 and over, the Regular Savings Share APY will apply. Rates and information are subject to change at any time. Fees could reduce earnings on the account(s). The disclosed dividend rates are variable and may change after the member opens the account(s). Find our current dividend rates at PSECU requires a $5 minimum balance to open and maintain a Regular share account. This $5 share account deposit is also required to be eligible to receive the Youth Savings rate, and the member must be in good standing as defined by PSECU’s Bylaws, Article II, Section I. PSECU will make a $5 minimum share purchase on behalf of the member.  

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.