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Through the magic of digital delivery, free ATMs, and mobile check deposit, there is no reason for today’s youth to EVER switch bank accounts. Even through college, grad school, multiple job changes, and marriage, your bank and card accounts can simply follow you around the country.

That means it’s more important than ever to make sure you are banking your customers’ kids. Even so, the big players haven’t wholeheartedly climbed onboard the youth banking movement. While oft-times offering exhaustive college-banking programs, they often seem indifferent to youngsters still at home.

We see most of the innovation in family banking at the community bank and credit union level. Case in point: Nebraska’s Gothenburg State Bank’s ($100 mil deposits) three-pronged effort to safeguard the cash of everyone in the family:

• Little Savers Club (age 0-3):
  — Savings account paying 3.5% APY on first $2,000 (then 0.10%)
  — Physical piggy bank
• Crayon Account (age 4-13):
  — Savings account paying 3.5% APY on first $2,000 (then 0.10%)
  — Dave Ramsey “Teaching Kids About Money” financial education kit
  — Box of crayons and coloring book
  — Savings deposit book
  — Deposit rewards (toys & books)
• Super Savers Account (beginning at age 10-13)
  — Savings account paying 7% APY for (one year only) on first $2,000 (then 0.1%) 
  — Requires monthly deposits of $25 or more for the higher rate

Bottom line: I’m impressed that the bank pays a high rate on the first $2,000. It’s very hard to teach your kids the value of compound interest when they receive only a few pennies per month in interest. The bank is paying out a maximum of $70 extra per year ($140 in the Super Saver account for tweens, note 1) to keep mom & dad happy.

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Gothenburg State Bank homepage with kids’ savings promo (15 Feb 2013)

Kids’ deposit products page (note 2, link)

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Notes:
1. It’s not entirely clear whether the 7% Super Saver rate is good for a single year, 6 months, 3 years or even longer. But I’m making an educated guess that it’s a one-year bonus program to jump-start tween savings.
2. I’m surprised the bank doesn’t tout the high rates on the webpage (you must follow an obscure link to the rate page). Perhaps they don’t want adults gaming the system to score the extra interest.
3. For more on youth banking, see our July 2011, Online Banking Report.