Bank Accounts for kids

[Justin234]

I wasn't sure whether to post this in "Parenting" or "Investing", but I recently found out that my credit union offer's "early investor savings accounts" (that is, for anyone under 17) at 6% interest up to the first $500, then some negligible rate above that. So I'm going to open accounts for my kids and put in the $500. It's kind of small potatoes in terms of the overall stash, but I can't think of a safer way to get interest at that rate, and when my kids are older it might be a way to teach them about savings. The downside is that it's not a great lesson in compounding interest since the interest won't grow at the same rate, but maybe I can convince them to transfer their earnings above $500 into a Vanguard Fund...

[imustachemystash]

Being from the pacific northwest as well, I think you are talking about BECU?  We have that account for our kids but they are too little to know about it (ages 2 and 4).  We put Christmas and birthday money in it.  When it gets over $500 we transfer it into the Vanguard 529 plan.  I think it will be more useful when they get older. 

[Justin234]

Yes, BECU! I haven't opened the accounts yet, but will whenever I get to the bank. Our kids are too small as well, but seems like a good thing to have for the future. We can decide when to let them know it exists... maybe as a going away to college gift? :)

[acroy]

That BECU deal is SWEET!

Anyone know of anything similar national, or local in TX? The local credit union here DATCU only offers 0.2% on their Youth savings

[Justin234]

Just as follow-up I set up my BECU kid's accounts $500 * 3 - pretty simple, just needed to bring in their Social Security Cards.

I passed on the ATM cards (who needs three more of those?) Still not sure what I'll do with the interest as of yet, since it won't compound.

[clutchy]

I don't even bother.  All bday and xmas presents go straight into the 529 plan.

[Justin234]

I don't even bother.  All bday and xmas presents go straight into the 529 plan.

Yeah, we don't have a 529 plan, so no alternative. and so far no one's been giving the kids cash for presents. We'll be getting $90 per year between the three accounts, which is kind of negligible, but will add up over the years. I'll probably just leave the interest there at 0.1% until I come up with something good to do with it.

[clutchy]

You should start a 529.  They are free and will earn substantially more than a savings account.

[Fuyu]

That's great! My grandmother started the same thing for me when I was 4-5 years old (and when interest rates were much higher). I was too young to understand the concept of interest income at that age, but it helped instill the idea that if I don't spend money, it'll grow.