The $1k cap is low, but this might be a good account for your kids. The 8% savings will earn you about $40 over a 5% savings account for the next 16 months with a $1k balance. A reader mentioned this promo along with the new member 7% 12-month $1K Max CD (see post) came in handy for his sister's kids. Custodial and joint accounts can be opened online.
Patelco is still offering a 5.50% APY 9-month CD which requires direct deposit. A yield of 5.50% APY is also available for an IRA certificate on terms of 24 to 35 months, and this does not have any direct deposit requirements. See rate table for more info.
Patelco is one of the few credit unions in which anyone can be eligible to join. See this Patelco page for the full eligibility list. Note at the bottom it states that anyone can join the California Association for Older Americans regardless of age or geographic location. You can apply for Patelco membership online here. In the Eligibility section of the membership application if you type "Older Americans", in the lookup field, this association should appear in the eligibility list of step 2.
Patelco membership requires a minimum initial deposit of $5 into the savings account. Note, you'll be charged a $3/month fee if your total deposits (the sum of savings, checking, certificate, IRA, and money market balances) is under $150. This fee will also be waived if you have direct deposit or if you have Patelco's Free Checking Account.
An important issue about Patelco is that it is NOT federally insured by the NCUA. It's privately insured by American Share Insurance (ASI) for up to $250K per account. For more discussion on this issue, please see this post.
Thanks to the reader who emailed me info on this 8% savings account.