Teaching your teenagers healthy money habits like saving and budgeting from an early age is one of the best gifts you can give them. Having their own savings account not only allows them to securely set aside money for short and long-term goals, but it also helps them learn crucial financial skills.
In this blog post, we will discuss the benefits of opening a savings account for your teenager, features to look for when choosing one, provide an overview of the best savings accounts of 2023 specifically suited for teens, as well as share tips, to motivate them to save regularly.
Key Takeaways
• Teaching good savings habits from an early age sets up financial responsibility for life. Having their own savings account encourages teens to set aside money and track spending.
• Savings accounts provide more security than cash, allow teens to earn interest, and teach concepts like online banking, deposits/withdrawals, balance monitoring, etc.
• Important features to compare when opening a teen savings account are minimum balances, interest rates, FDIC insurance, fees, and accessibility.
• Tips to motivate good teen savings behavior include making it a habit, setting short-term goals, scheduling money check-ins, gamifying saving with competitions, utilizing banking apps, and matching windfalls.
• Getting teens started on regular saving and money management early through their own savings account establishes good financial literacy and responsibility for the future.
Why Should Your Teen Have a Savings Account?
Here are some of the biggest reasons why you should help your teen open a savings account:
1. It encourages saving discipline from a young age
Having their own separate savings account motivates teens to set aside a portion of any money they receive, whether it is from allowances, gifts, or part-time jobs. Tracking the account balance growth over time reinforces good savings habits.
2. It provides security for their money
Rather than stash away cash gifts and earnings around their room or carry wads of cash for spending, a savings account offers your teen far more security for their money. Their funds will also earn interest over time.
3. It teaches financial responsibility
Monitoring their savings account transactions and balance helps introduce teens to concepts like deposits, withdrawals, interest rates, online banking, and maintaining a minimum account balance. Staying on top of their account teaches discipline.
4. It lets them save towards goals
An important part of learning how to manage money is to save towards short and long-term saving goals. Teens can use their savings to set aside money for things like video games, gadgets, college tuition, or a car.
Choosing the Best Savings Account
Here are a few key factors to keep in mind when comparing savings accounts for your teenager:
Minimum balance requirements
Many banks require you to deposit and maintain a minimum balance in savings accounts, with fees charged if you go below it. Look for teen savings accounts with low or no minimum balance needs.
Interest rates
Compare interest rates offered on different teen savings accounts. The higher the interest rate, the more your teen’s savings grow.
FDIC insurance
This federal-level insurance protects up to $250,000 in deposits in case the bank fails. Verify accounts are FDIC insured.
Bank fees
Watch out for monthly maintenance fees if your teen’s balance goes below a threshold or fees for transactions, withdrawals, etc. Accounts with low or no fees are ideal.
Access
Your teen should be able to easily deposit money and withdraw funds when needed. This often means an ATM card, checks, online transfers, or mobile banking.
The Best Savings Accounts for Teenagers in 2024
Here are our top recommended savings accounts tailored specifically for teenagers:
Best Overall: SmartyPig Teen Savings Account
SmartyPig is an online bank that offers one of the best high-yield savings accounts specifically geared for teenagers aged 13 to 17. It requires no minimum deposit and has no monthly fees.
The account pays a very competitive interest rate that typically exceeds the national average. Your teen’s deposits also earn an additional 0.25% bonus interest every quarter if they grow their balance.
Another SmartyPig perk is their unique “goals” feature. It lets your teen split their savings across different saving goals like college, a car, a house, etc. Family and friends can also contribute gift money towards specific goals.
The account includes a free debit card to make deposits and withdrawals easy. SmartyPig also has a referral program that lets your teen earn $10 for every friend they refer who opens and funds an account. There is also excellent customer service support by phone, email, or online chat.
Overall, SmartyPig’s teen savings account stands out with its industry-leading interest rates, zero fees, intuitive online interface, and focus on savings goals.
Other Features:
• No minimum opening deposit or balance
• FDIC insured up to $250,000
• Unlimited free withdrawals
• Parental controls and oversight
Best for High-Interest Rates: Sallie Mae High-Yield Savings Account
If your top priority is finding the savings account with the highest interest rate, Sallie Mae Bank offers a great high-yield savings option for teenagers.
Their savings account has interest rates that are consistently higher than the average national rate, so your teen’s money grows faster. Sallie Mae offers incredible flexibility with no monthly maintenance fee and no minimum balance requirement.
Teens can easily make free ATM withdrawals and deposits at thousands of ATMs across the country. The account also comes with a free debit card to easily manage funds on the go. Parents also get access to view the account activity.
While Sallie Mae Bank operates exclusively online without local branches, its website and mobile app interface make digital banking a breeze. They also offer excellent live chat and phone customer support.
Other Features:
• Industry-leading interest rates – up to 5x the national average APY
• No minimum balance or monthly fees
• Unlimited free transactions
• FDIC insured up to $250,000 per depositor
If you want a basic, no-frills savings account that simply offers the highest interest earnings on your teen’s deposits, Sallie Mae Bank is tough to beat.
Best from a Major National Bank: Chase First Banking Teen Savings
For parents who prefer doing their banking with a major national retail bank, Chase Bank offers a great teen savings account option.
The Chase First Banking Teen Savings account offers an extremely competitive interest rate versus other national banks. Students ages 13 to 17 enjoy no monthly service fee checking with low minimum balance requirements.
Chase offers 24/7 live customer service by phone and online chat support to help teens manage their accounts. The bank’s large network of ATMs and widespread branches also make in-person transactions convenient in areas where it operates.
Parents can monitor balances and account activity easily via online banking and Chase’s mobile app. Teens also receive free Chase debit cards to access funds from their savings. Chase also offers bonus interest rates for students who bank with them through college.
Other Features:
• Access to over 16,000 Chase ATMs
• Over 4,700 brick & mortar branches
• FDIC insured
• Parental controls and oversight
Best from an Online Bank: Marcus by Goldman Sachs High Yield CD
While most teenager savings accounts are standard bank accounts, some financial institutions offer unique options.
Marcus High Yield CDs from Goldman Sachs allow teens to open certificates of deposit for just $500. CDs pay higher interest rates than savings accounts in exchange for locking up your money for a set period. Marcus offers competitive CD rates with options from 3 months up to 6 years.
Opening a CD teaches adolescents another profitable way to earn interest on savings for short and long-term goals. It also introduces them to the concept of maturity dates, early withdrawal fees, and laddering CDs. This education will serve them well as adults.
With no monthly fees, the Marcus High Yield CD makes a great addition to their savings portfolio of both liquid and locked savings. Marcus also offers 24/7 support from their savings experts by phone.
Other Features:
• Terms from 3 months to 6 years
• No minimum balance or monthly fees
• Rate boosted by 0.15% for banking with Marcus
• Can open multiple CDs
• Easy online account access
Tips to Help Teens Develop Good Savings Habits
Opening a savings account is just the first step to help your teenager learn money management. Here are some tips to motivate them to save regularly and responsibly:
1. Make saving a routine habit
Encourage setting aside a portion of any money they receive right away before they start spending. This could be a percentage of their allowance, monetary gifts, or part-time job earnings.
2. Start them young
Introduce money concepts early and open their first basic savings account alongside a fun checking account by ages 8 to 12. This establishes money management habits early.
3. Set tangible short-term savings goals
Have them save up for something specific like new clothes, video games, their next outing with friends, or finding a passion project. Visual goals keep them motivated.
4. Schedule parent-teen money check-ins
Sit down each month or quarter to review their savings goals and progress. Offer to match their savings each period as an incentive.
5. Make saving a friendly competition
Spark their interest by challenging siblings or friends to see who can save the most each month. Consider small rewards for the winning saver.
6. Get them banking app literate
Help them access their savings accounts via user-friendly banking apps on their smartphones. This keeps their savings top of mind.
7. Incentivize them to save any windfalls
Offer to match any spontaneous money gifts from relatives towards their savings as an incentive to save it rather than spend it all.
Conclusion
A savings account is the ideal first step to set your teenager on the path of financial responsibility and literacy. Getting them in the habit of saving a portion of all the money they earn builds discipline. Opening a dedicated teen savings account removes barriers and helps reinforce routine saving toward their short and long-term goals.
With its fantastic interest rates and tailored teen features, our top choice is the SmartyPig Savings Account. Sallie Mae Bank and Chase Bank also offer competitive interest yields on deposits with no fees. Check if your bank offers teen savings accounts with parental oversight features too.
The most important thing is to start your teenager on the journey of saving and money management now. Making savings a habit from an early age will reap huge rewards down the road on their path to financial independence.