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With the national average rate for 12-month CDs hovering around .67%, it may come as a surprise that some banks and credit unions are offering savings accounts and CDs with rates as high as 5%. But there’s just one catch: You must be a kid.

Several banking institutions around the country offer special savings accounts or CDs specifically for children. While they tend to have deposit limits and are usually limited to children under the age of 18, a few are distinguished by APYs much higher than other accounts.

“It’s geared towards children who are trying to build up their savings, which is what they should be doing in this environment,” says Stephen Cohen, vice president for marketing and community relations for LGE Community Credit Union in Atlanta.

The LGE Union in Atlanta is offering a savings account with a mind-blowing 5% interest rate – though that’s only on the first $500 deposited. Cohen says the program, which began in March, has been enormously successful in large part due to its many kid-friendly features. Depending on their age, children are placed in one of three “clubs,” all of which earn the same rate:  the Dollar Dog Kids Club (ages 5-12), Cha-Ching Savings (ages 13-17) or the Edge Savings (ages 18-22). In addition to an interest rate that would make most adults salivate, children who open accounts are also given a toy, a newsletter and a card on their birthday.

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Parents can also teach kids about balancing liquidity with interest with a certificate of deposit. Here too, select banks offer rates miles ahead of most CDs. One such institution is the National Institutes of Health Federal Credit Union, which limits membership to people who work in the health care industry in Maryland, Virginia, West Virginia and Washington, D.C. (immediate family members can also apply). Children of members can open a five-month CD known as a “Hi-Five Youth Certificate” for a 5% APY for five months. The one catch is that there’s a $1,000 deposit limit.

The Illinois-based Baxter Credit Union likewise offers a special CD for children. While the rate – 2.5% – is a bit more modest than the NIH Federal Credit Union’s 5% offer, the deposit limit is set much higher at $15,000. The program started five years ago, and has been a success. “It’s designed to encourage saving at all levels and ages, and we thought a premium account would be the way to do it,” John Bratsakis, senior vice president of business development, explains.

Customers can get the 2.5% rate as long as they make their initial deposit before their child’s 18th birthday, and the rate won’t drop if they turn 18 during the life of the 36-month CD. “We don’t want to punish kids for turning 18,” jokes Bratsakis.

Despite the popularity of these accounts at BCU and LGE, there are still a limited number of banks marketing savings deals for kids. Our partners at found only eight such institutions, and only half of those offer substantially higher rates. Still, if you are eligible to join one of these institutions and want to teach your child the virtues of saving – or just want to get a jump-start on the college fund – these deals can’t be beat.

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