How to Open a Savings Account For Kids
Today is the best day to teach kids the value of money. Learn how to open savings accounts for your little ones and encourage them to budget and save!
Is My Child Old Enough for Kids’ Savings Accounts?
There is no law restricting any age to open a savings account. It is only that children under 18 years old need their parents in opening their own savings account. The bank account they can open is almost always under a custodial account.
The “right age” to allow your kids to have a saving account is your discretion. It is up to you when to level them up from piggy bank to real bank. But, if you ask the Consumer Financial Bureau, the younger you teach your kids to save, the better.
How Do I Open a Bank Kids’ Savings Account For My Child?
You may have already experienced account opening in the past for yourself. Opening your kid’s savings account undergoes a similar process. You fill up an application to apply. You, as a parent or guardian, need to present valid proof of identity. You can bring a driver’s license, passport, or other government-issued photo ID. You also need your child’s basic personal information, such as full name and birthday. So bring your child’s birth certificate if you can.
You can make uniform transfers to your kids’ savings accounts from your bank account. But if you want, you can also let your child open the account themself. They can also make the deposits themselves over the counter or online.
According to the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA), kids’ savings accounts are under the protection of federal law. So in this light, they are also not subject to taxation. Don’t you think it is the best kind of savings? It’s tax-free! So why not save?
Should My Child Use a Banking App?
Online banking is how 21st-century banking works. But, there are limits to its uses and advantages. Mobile banking is excellent for keeping an eye on the account and track transactions. If you want to surveil the account, a banking app is a good idea – for you.
For your child, a banking app might not be that much of an idea. Bank transfers are easy to execute banking apps. If you are not yet confident in your child’s curiosity and restraint, you may not want to risk it.
But, you can also use your online banking account to encourage your child to save. Now and then, you can show the current balance of your kids’ savings account. This practice can help boost their morale to budget better and save more.
6 Expert Hacks to Opening a Kids Savings Account
1. Open a Savings Account, Not a Checking Account
A checking account is for spending money, which is not what you aim for. You want to encourage your child to save, not spend. So open a kids savings account. Kiddie savings account are joint accounts to ensure the money is safe and sound.
The same goes for a debit card. One swipe of the card and the money you worked hard to save can be gone in seconds. You can opt not to have a debit card for your kids’ savings account and have a passbook instead.
2. Bank at the Branch and Online
It can be so much more easy and convenient to do many activities, including banking online. But, the experience of actually handing over a slip, the money, and keeping the receipts is a different thing altogether. The personal touch can help motivate your child to save again and again.
So if you can, bring your child to the branch to develop their love of saving. Make the journey to the bank and the office experience fun and memorable, so the child turns to it with fondness. That way, the practice can stay with them longer.
3. Find a Bank That Promotes Financial Education
Choosing a bank to trust is never easy. Choosing a bank for your kids is even much more difficult. Your kids will see the logo and slogan of the bank you choose for them. They will experience the customer service of the bank.
It is wise to choose a bank you not only think will keep your child’s money safe. But a bank that will teach your child good budgeting and saving practices. Choose a bank that promotes, guides, and advocates personal finance and money management.
You can check out the Consumer Financial Protection Bureau to know trustworthy banks. You can start by checking out prominent banks like Bank of America and Capital One as references.
4. Look For the Highest Yields
Like making other choices you make in life, compare before your commit. View the interest rates across major and minor banks. Rank at the top the banks that have the highest yield. Open an account that does not only store your child’s money but grows it as well. Find the bank that has the highest interest rate and invest in that.
5. Avoid Account Fees and Ask About Features
Banks and credit unions can sweep some things under the rug. Never be afraid to ask about the features of the account you are opening. Ask for a breakdown of all the possible fees they can charge you with. If you’re confused and they don’t clarify your concern, refuse the offer.
Also, avoid savings accounts for kids that need a minimum opening deposit. You do not need that. A minimum balance can restrict your financial future. If you need your money for an emergency, pulling it all out can cost you so much because of a minimum balance feature.
6. Don’t Forget About Saving for College
Saving money, in general, is already a great start. But children’s savings accounts are better with the future in mind. Plan ahead for your child’s education and lessen your future worry. Inspire them that the hard work they are doing is for them at the end of the day. Remind them that the penny they save now can help them reach their dreams later.
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