How Greenlight’s Parent-Paid Interest works for kids and parents
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Key takeaways:
Greenlight’s Parent-Paid Interest lets you set the rate your kids earn on savings, funded directly from your Greenlight Wallet.
Parent-Paid Interest payments are made on the 1st of every month, based on your child’s average daily balance.
You can set any rate (up to 1,000%) to motivate saving, but realistic rates keep lessons grounded.
What is Parent-Paid Interest, and how does it work?
Parent-Paid Interest is Greenlight’s way of letting you play “the bank” for your kids. You pick the interest rate, Greenlight does the calculations, and the payments come straight from your Parent Wallet.
Here’s how Greenlight’s Parent-Paid Interest works:
You decide the rate. It can be as low as 1% or as high as 1,000% (though most parents keep it realistic).
Every month, Greenlight looks at your child’s average daily balance and figures out what you owe them in interest.
On the 1st of the month, that interest shows up in their account.
The money comes from your Parent Wallet, so you’ll want to keep it funded.
The idea is to encourage kids to watch their money grow, which makes the lesson of “money earns money” feel more real.
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What Parent-Paid Interest rate should I set?
That depends on your goals. For many families, a rate between 2%-10% is high enough that kids notice the difference, but not so high that it feels unrealistic.
When you’re setting the rate, ask yourself a few questions:
How old is your child? Younger kids may be excited to see their balance grow, while teens might be ready for a talk about how bank interest rates work in the real world.
What’s your budget? This comes from your own wallet, so pick a number you can stick with.
Do you want to keep it steady, or change it up? Some parents like to raise the rate during holidays or when kids reach specific savings goals.
Pros and cons of Parent-Paid Interest
Like most teaching tools, Parent-Paid Interest has its pluses and minuses. Here are some to consider.
The upsides:
Demonstrates compound interest. Kids can actually watch their balance grow month after month.
Boosts motivation to save. A higher rate set by you gives kids a reason to think twice before spending.
Fills in the gaps when real-world rates are low. Even if banks are offering 1% or less, you can set a Parent-Paid Interest rate that makes it feel meaningful.
Both you and your kids download the Greenlight app — with tailored experiences. They check off chores, you automate allowance. They spend wisely, you set flexible controls. They build healthy financial habits, and you cheer them on.
The trade-offs:
Unrealistic expectations. If you set a sky-high rate, kids may think that’s what banks typically pay. That makes it important to explain the difference.
Parent-funded. Every payment is deducted from your Greenlight Parent Wallet, so you’ll need to budget accordingly.
Not “real” bank interest. Unless you explain it clearly, kids might not understand the difference between your payments and the interest they’ll see on a future savings account.
Parent-Paid Interest vs. Greenlight savings reward
Greenlight offers two ways for kids to grow their savings. Here is how Parent-Paid Interest and Greenlight savings rewards** work.
Feature | Parent-Paid Interest | Greenlight Savings Reward |
|---|---|---|
Who funds it? | Parent (from wallet) | Greenlight |
Rate | You set it (up to 1,000%) | Fixed 1% annually (up to $5,000 balance) |
Payout schedule | Monthly, on the 1st | Monthly, on the 1st |
Purpose | Family teaching tool | App-wide reward |
5 helpful tips when using Parent-Paid Interest
Parent-Paid Interest is an opportunity to spark deeper conversations about money. Here are a few ideas to try:
Keep it realistic. Rates between 2% and 10% strike a balance between exciting and sustainable.
Explain how it’s different. Make sure your kids understand that banks typically pay much lower rates, so this feature is meant to teach, not to mirror real-life situations.
Celebrate progress. Every month, review together how much interest they earned..
Tie it to goals. Whether it’s a bike, a laptop, or college savings, show kids how interest helps them reach milestones faster.
Adjust over time. As kids get older, change the rate or add new conditions to keep the lesson fresh and age-appropriate.
With Parent-Paid Interest, you’re in the driver’s seat when you choose the rate, giving your kids a front-row seat to how saving money pays off.
With a debit card of their own, kids and teens learn to spend wisely, keep an eye on balances, and track their spending. Big money dreams? Set savings goals and start investing with as little as $1 — with your approval on every trade.
Make saving fun for kids. Customize allowances, set savings goals, and learn to invest with Greenlight’s award-winning app. Try Greenlight, one month, risk-free.†
By: Alyssa Andreadis
Alyssa Andreadis is a writer with more than 25 years of marketing experience and is passionate about helping families feel confident with money. She’s written hundreds of articles on personal finance, parenting, and financial literacy. A single mom raising three money-smart teens, Alyssa brings a real-life perspective to her work. She lives in Pennsylvania and always has a knitting project in progress.
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