Once your child’s savings outgrow a piggy bank, the next thing you’re going to want to do is find a way to keep that money safe, accessible – and growing.
Three great ways to do that are regular savings accounts, money market deposit accounts, and certificates of deposit - or CDs - at your federally insured financial institution. Each of these accounts offers you a way to save money, and to earn interest to help that money grow over time - and, at your insured institution, that money and any accrued interest are protected for up to $250,000.
A regular savings account lets you safely store money and earn interest at a fixed rate, but you can only make a limited number of transfers or withdrawals each month without being charged a fee. Money market deposit accounts are somewhat like a basic savings account, and while they may require a higher balance, they also tend to pay higher interest rates than a regular savings account.
CDs tend to earn the most interest. However, to get those higher rates, you commit to leave that money untouched over a period of time, usually a few months to several years. Any early withdrawal could result in financial penalty.
Before opening an account for your child’s money, be sure to ask about any minimum balances or withdrawal limits that could result in fees.
These interest-earning accounts are a great way for kids to learn about saving money and watching it grow, and we’ll be glad to help you get one opened.
