This seems like a good way to teach the value of savings to kids. With 10% interest, a savings of $500 will earn $50 over a year which is $30 more than what you would make at EmigrantDirect (assuming no rate changes).
Affinity Bank provides online banking and you can start the account opening process online, but it requires mailing in the application and deposit check. You can also visit the bank's branches which are in several California cities including Ventura, Camarillo, San Francisco and Irvine.
Credit for finding this deal goes to Andrea. More discussion about this account is available at this SavingAdvice thread.