Kids Saving Accounts: A Beginner's Guide for Parents

Introduction

A kids saving account is a bank or credit union account designed for minors. In many places these accounts are opened and managed by a parent or guardian, with the goal of helping a child build savings and learn how money grows over time. They can be a simple way to start developing good money habits early.

What is a kids saving account

Kids saving accounts come in a few forms, and the exact names may differ by country. Common types include custodial accounts, minor savings accounts, or junior accounts. The child is the eventual owner of the funds, but an adult typically handles the account on the child’s behalf until the child reaches the age of majority.

How they work

Ownership and control arrangements vary, but many accounts involve a parent or guardian opening the account and supervising deposits. Some accounts allow limited access for the child with parental oversight, while others restrict withdrawals until the child is older. Terms, fees, and minimums are set by the financial institution and can differ widely.

Typical features to compare

• Interest rate or growth: some accounts offer interest, while others are simple savings accounts with no added growth.
• Fees and minimums: look for monthly maintenance fees, minimum balance requirements, and any charges for transfers or withdrawals.
• Accessibility: who can deposit, withdraw, and view the account; whether online access is available to both child and parent.
• Age and ownership rules: when ownership transfers to the child and what happens if the child moves to a different country.
• Parental controls: options to oversee activity, set spending limits, or pause access.
• Tax considerations: tax treatment for earnings and deposits varies by country and may affect returns.

Benefits for kids and families

• Teaches money habits early: regular saving builds discipline and long-term thinking.
• Demonstrates how interest grows savings: kids can see the effect of time and patience.
• Provides a safe place for, and visibility into, a child’s money goals (like a first big purchase or education fund).
• Helps families plan and talk about money in a constructive way.

How to open one

1. Check eligibility: confirm that your country, state, or province offers a kid-friendly savings option and who must be the account owner.
2. Compare options: look at features, fees, accessibility, and any age requirements.
3. Gather documents: typically you’ll need IDs, proof of address, and your child’s information.
4. Apply: complete the application with the chosen institution, and designate you as the account manager or custodian.
5. Fund the account: make an initial deposit if required and set up any ongoing contributions.
6. Set expectations: discuss goals with your child and establish a savings plan.

Common questions

• Do kids saving accounts affect a child's credit score?

Generally, saving accounts on their own do not affect a child’s credit score. Credit is typically built through borrowing and repayment activities later in life.

• At what age can a child access the funds?

Age limits and transfer rules vary by country and account type. Some accounts transfer ownership or access at adulthood or a specified age.

• Are there tax benefits or considerations?

Tax treatment varies by jurisdiction. Some earnings may be taxable or reportable differently from adult accounts. Check local guidance.

Alternatives

• Custodial accounts (such as UTMA/UGMA in some countries): these enable a broad range of assets under adult supervision until the child comes of age.
• Junior savings or investment accounts: some markets offer age-based products with different features.
• Education savings plans or gift accounts: these focus on saving for future education or specific goals.
• Regular savings accounts with a family or guardian as custodian: simple options that encourage saving without special minor-specific rules.

Bottom line

Kids saving accounts can be a practical first step in teaching financial responsibility while setting aside money for future goals. By comparing features, understanding control arrangements, and involving your child in the process, you can choose an option that fits your family’s needs and preferences.