Examples of Special Incentives Offered Kids
for Opening Savings Accounts
Many credit unions and banks offer
- Programs for kids aged 0-12, and for kids aged 13-18 (age ranges vary) which include:
- No-fee savings accounts, with very low initial deposit and low balance requirements.
- Websites with age-appropriate activities (in some cases financial literacy related), and
- Other “perks” such as monthly compounding of interest (usually at very low rates), quarterly newsletters, and ways to accumulate “points” that can be redeemed for toys or movie tickets, etc.
However, a small number of financial institutions offer much greater and far more meaningful incentives to encourage kids to establish savings accounts and to make continuing deposits into them. Following are a few examples of institutions that offer monetary “rewards” and preferential interest rates to kids.
It is this kind of monetary incentives that will help kids build their savings accounts – compared to the relatively insignificant gifts that distort the motivation to save and distract from the core lessons that need to be learned. (Gifts like toys and movie tickets reinforce motivation based on “wants” – similar to motivating kids to buy Cracker Jacks or Happy Meals because the kids want the prizes inside – rather than teaching kids the importance of defining, setting, and focuusing on “needs”. Defining and giving priority to “needs” is a fundamental lesson that should be learned early.)
Parents/guardians and their kids should search out institutions that offer meaningful financial incentives to kids and support those institutions with their memberships and financial service relationships. If you are a member of a credit union that does not currently offer meaningful financial incentives such as those described below, please encourage it to adapt a program similar to these -- or one that offers equivalent financial benefits. Also, please encourage it to deemphasize motivating kids with “wants”, and instead educate kids about the important of “needs.”
Community Federal Credit Union, with offices in and near Plymouth and Gaylord, Michigan:
Through educational programs at local schools, kids are taught the benefits of savings accounts and are given punch cards to provide incentives to the kids to establish them. Each time a kid makes a deposit, the card is punched. After 5 punches, $2.00 is deposited into the kid’s account. After ten punches, $5.00 is deposited into the kid’s account. If the kid makes a $5.00 average deposit, after 10 punches the kid will have deposited $50.00, and will have received $7.00 in “interest” – equal to 14% interest. (This exceptional program is not described on their website.)
Lake Michigan Credit Union, Grand Rapids and Kent, Kalamazoo and Ottawa Counties, Michigan:
The Lake Michigan Credit Union offers Kids Club Savings Accounts (for kids under 12) and Teen Club Savings Accounts (for ages 13-17), which offer high interest rates. “Any balance under $1,000 is guaranteed to get 3.5% Annual Percentage Yield. When the money reaches over $1,000, the rate becomes that of a normal savings account.”
BECU – a Washington State Credit Union:
BECU (formerly known as the Boeing Employees' Credit Union) is the largest community credit union in the state of Washington and one of the five largest in the United States. It offers Early Saver Accounts with a higher interest rate on a kid’s first $500 – generally 6% or higher. Any member under age 18 can open an Early Saver with a $5 minimum deposit. There are no fees.
If your financial institution offers special financial incentives and interest rates on Kid’s savings accounts, please tell us about your program. We may add your program to our list of examples. This is not intended to be a comprehensive list of institutions offering special services to kids, but to include representative examples of what parents/guardians and their kids should hope to find at local financial institutions.