Want to teach your children the importance of money? Start a Savings Account for them today. Here are 7 options for you and your child.
Warren Buffet bought his first stock at age 11 but still felt he could have started earlier. However, investing as an 11-year old may not be feasible for most kids. But those under the age of 18 should, at the very least, be encouraged to start. Financial experts believe that it is never too late to start saving. And the sooner you start, the better it is for your future.
Many parents start saving for their child from their birth. There are many ways you can go about doing this. For instance, you could either get an insurance policy in your child’s name or open a Fixed Deposit account for them. If you’re a little more traditional, you can start investing in gold as well.
In any case, if saving is your prime objective, opening a Savings Account for your child will certainly help. Opening a savings bank account for your child helps you build a corpus for your child’s future needs, like their education. It also helps to inculcate the habit of savings in children from an early age.
Additional Reading: Benefits Of Having A Savings Account
|Guidelines issued by the Central Bank allows minors aged over 10 years to operate bank savings accounts independently and use facilities such as ATMs and cheque books.|
Here are some of the more popular Savings Accounts for kids offered by banks in India:
Kids Advantage Account by HDFC Bank
This account is specially designed for kids wherein the ATM/International Debit Card is issued to children up to 18 years of age, in the child’s name, with the permission of their parents/guardian. Your child can withdraw Rs. 2,500 through an ATM and the daily shopping limit on this account is set at Rs. 10,000.
With this account, your child can enjoy free cash withdrawals from other ATMs and also get a free personalised cheque book. This account also comes with the advantage of free Education Insurance cover of Rs.1,00,000. As a parent or guardian, you can monitor your child’s account through the passbook facility or net banking. Additionally, you can get free e-mail alerts on account transactions.
If you’d like to step up from this account and think about investing, this account lets you do it. By transferring Rs. 1,000 every month for a year, you can build an investment pool and also open a Fixed Deposit account via this account. Once the balance in this account reaches or exceeds Rs. 35,000, the amount in excess of Rs. 25,000 will automatically be transferred to a Fixed Deposit Account for 1 year through the “Money Maximiser” sweep-out facility.
To open this account your child should be a minor or under the age of 18 and you as a parent/guardian should have a Savings Account with HDFC.
Additional Reading: 10 Money Terms Every Parent Must Teach Their Kids
Young Stars & Smart Star Account by ICICI Bank
This Savings Account by ICICI Bank is split into two types. While the Young Stars account can be opened for minors who are below the age of 18, the Smart Star Savings Account is designed for children between the ages of 10 and 18. This facility is available at all ICICI bank branches in all cities across the country.
You can avail a Debit Card with this account free of cost. The daily withdrawal limit or spending limit on the Debit Card is set at Rs. 5,000. With this account, you can also keep track of your transactions and receive a monthly e-statement. Alternatively, can also collect it from your bank’s branch.
However, the minimum monthly average balance (MAB) to be maintained is Rs. 2,500. You will be charged 5% of the shortfall in required MAB if you fail to do so.
My Junior Account by Kotak Mahindra Bank
This Savings Account by Kotak Mahindra Bank is designed to inculcate the habit of savings in children from an early age. It comes with personalised Junior ID card for children that offers a host of privileges across dining, entertainment and shopping on kids’ brands.
The Junior Account also offers 6% p.a. interest on a savings balance over Rs. 1 lakh and up to Rs. 1 crore. You can earn 5% p.a. interest on account balance up to Rs. 1 lakh. These rates are subject to change from time to time, so check the latest rates on the bank’s website.
Kids above the age of 10 can request for Debit Cards with a withdrawal limit of Rs. 5,000.
Additional Reading: ATM Usage And You
Future Stars Savings Account by Axis Bank
The Axis Bank Future Star Savings Account is designed for children below 18 years of age. This account can be operated by a guardian for children below 10 years of age.
You can open this account for your child with an opening deposit of Rs. 2,500. Tracking of this account can be done through monthly e-statements. You can also avail a free cheque book every quarter in your name or your ward’s name.
The interest on an account balance of Rs. 50 lakhs and above is 4% p.a. and for an account balance up to Rs. 50 lakhs it is set at 3.5%.
This account comes with a personal accident insurance cover of up to Rs. 2 lakhs if the card is swiped once every six months. Additionally, you receive a combined lost card liability and purchase protection liability of up to Rs. 50,000 to protect your child’s Debit Card from fraudulent use.
Power Kids Account by IDBI Bank
The Power Kids’ Savings Account by IDBI Bank is an attractive proposition since it requires a MAB of only Rs. 500. No penalty charge will be levied in case of non-maintenance of desired average quarterly balance (AQB).
It has a set daily withdrawal limit of Rs. 2,000 on its ATM-cum-Debit Card. Moreover, you can enjoy five free ATM transactions at other bank ATMs at non-metro locations. A personalised cheque book, free monthly e-statements and free passbook are just some of the perks you can enjoy with this account.
The best part of this Savings Account is that your child can avail an Education Loan at a competitive interest rate in the future for higher education in India or overseas.
Pehla Kadam and Pehli Udaan by SBI Bank
Both these accounts, Pehla Kadam and Pehli Udaan are savings bank accounts for minors that are fully loaded with banking features like internet banking and mobile banking that help acquaint children with different channels of modern-day banking.
While the Pehla Kadam account can be jointly opened for minors along with the parent or guardian, the Pehli Udaan account is specifically designed for minors above the age of 10 years who can sign uniformly and it doesn’t need to be jointly opened with the parent/guardian.
The MAB requirement is set at Rs. 5,000 in a metro, Rs. 3,000 in urban areas, Rs. 2,000 in semi-urban areas and Rs. 1,000 in rural areas. The maximum balance in the account can be maintained up to Rs. 10 lakhs only. A personalised ATM-cum-Debit Card is made available with your child’s photo embossed on the card and the withdrawal limit is set at Rs. 5,000.
CitiBank Junior Account
While this account can be opened for children below the age of 18, the Citibank Junior Debit Card is issued to children only above the age of 15. Cash withdrawal is free at all Citibank ATMs. However, you can set limits on your child’s Debit Card to control expenses. If you’re used to giving your child pocket money, you can make use of the standing instruction facility from your account to his/her account and make transfers easily.
This account comes with a free online banking facility, free online transfers to any bank account within India and a 24×7 customer service with CitiPhone Banking. If you’d like to invest for your child, you can also do that through the Systematic Investment Plan (SIP) and maximise your child’s wealth.
With the Junior Account, you can also check out the insurance plan that Citibank has to offer for your child. The BSLI Classic Child Plan/Dream Child Plan comes with dual insurance benefit for both you and your child, a built-in policy continuation benefit and 10 different investment funds to choose from.
Additional Reading: Financial Lessons You Can Teach Your Kids
The first step to introduce savings to your child is by opening a Savings Account for him/her. By doing so, you will not only encourage your child to save but also teach them the value of money.
In the meantime, you also educate them about the banking system and its functionality. But, don’t limit yourself to just a Savings Account. If you wish to save and invest, we have some amazing financial products as well. Be sure to check them out.