Why you should open a high-yield savings account for your child now
As a parent, you want to set your child up for a secure and successful financial future. One way to do this is to create a savings fund they can tap into for anything from their first car to their college education.
Piggy banks can be fun, visual ways to teach your kid how to begin putting aside money. But if you're just letting their money sit there, you (and your child) are missing out.
To grow their savings faster, you should open a savings account for your child — specifically, a high-yield one. Read on to learn why opening this type of account now can pay off.
See how much your child could be earning by viewing current savings rates here.
Why you should open a high-yield savings account for your child now
Here are four big reasons you should consider opening a high-yield savings account for your child today.
The sooner you start, the more their money can grow
Savings accounts earn interest, allowing the money you've put into them to earn even more money with no action needed on your part. Interest is calculated based on the current balance, including any interest earned in the previous period, so your funds grow exponentially the longer they're in the account. The earlier you open a savings account for your child, the more interest they can earn and the more they'll have to draw from down the road.
Check out today's savings rates now!
Interest rates are high right now
High-yield savings accounts can earn up to 10 to 15% more interest than regular ones. And rates are currently high — think 4.5% or more. That makes now a great time to open one of these accounts.
You can get started by checking out these top savings accounts. Don't forget to consider online banks, which often offer some of the highest rates plus perks like low or no fees.
They won't be tempted to touch it
Piggy banks are easy to crack open, and there's no shortage of things your kid would love to spend that money on. By putting their savings into a savings account, you keep this money out of sight and out of mind.
Of course, part of teaching your child to save is reminding them that savings are meant for the future. But it never hurts to add an extra layer of protection if they feel inclined to access the funds.
Their money will be safe
If you open an account with an FDIC-insured bank or NCUA-insured credit union, any funds you deposit are safe up to $250,000 per account, per institution. Whether your bank fails or interest rates drop, your deposits and earnings won't go anywhere. This can let you rest easy knowing your child will be able to rely on their savings when the time comes to use them.
Ready to open a high-yield savings account for your child? Check your options here.
The bottom line
We all want the best for our kids. One easy way to ensure they'll have the money they need in the future is by opening a high-yield savings account for them today. With this type of account, their money can grow interest faster and stay safe until they need it. Plus, there's something "grown-up" about having a bank account. You may find your child even prefers it to a piggy bank.
