Parents who wish to save for their children often want to start a savings account for them so that they can set aside a particular amount of money from their daily expenses. According to financial experts, it is never too late to begin saving, and opening bank accounts for youngsters teaches them the value of preserving their hard-earned cash. Parents can even help their children learn and comprehend money management in their early years, allowing them to handle money effectively in the future for their children. Introduce them to a kids savings account as the finest strategy to assist them in studying.
One of the best things you can do for your children’s future is to encourage them to save. You should ensure that your child’s future is secure as a parent. Learning financial management will help you avoid unnecessary debts in future and manage loans like personal loan, home loan, etc. effectively. Continue reading to see how the Kids Savings Account can help you plan your child’s future. You may open and manage a Kids Savings Account for your child to start saving for his or her future at a young age.
Things to consider before opening a savings account for kids.
Age
Depending on your child’s age group, banks allow you to open two types of Kids Savings Accounts for minors.
- Below 10 years
- Between 10 and 18 years of age
When you open a savings account in the name of a kid under the age of ten, you must do it in collaboration with the parent or guardian. Those for minors aged 10 to 18 years old, on the other hand, can be operated by the youngster. The account becomes inactive when the youngster reaches the age of 18 or becomes a major. Before it may be used by the child, it must first be transformed into a regular savings account. Even checks written by the parent and presented for clearing after the account has been converted may not be cleared.
Funds transfer
Check with the bank to see if you may transfer funds via NEFT when you start a Kids Savings Account. If you want to transfer money from your account to the account of your child, the bank should be able to help you. Check to see if the account has a ‘standing instructions’ feature that allows money to be debited from the parents’ account to the minor’s account.
Debit cards
Few banks issue a photo ATM/debit card, although some may include the parent’s or child’s name on the card. To receive automatic notifications after transactions, make sure the SMS alert option is turned on.
Minimum balance
Just like a traditional savings account, you must have a certain amount in the account to keep it open. If you started a Kids Savings Account, you need to keep an average balance between Rs 2500 to Rs 5,000 for most of the banks. To avoid any additional charges, as a parent, you should keep a minimum balance in your account.
Spending limit
These sorts of accounts have a spending restriction, which varies per bank. Some banks enable you to spend anywhere between Rs 1,000 and Rs 2,000 each day. Debit cards are issued by banks as part of the account opening process. The number of debits you can make in a financial year in the Kids Savings Account is similarly capped by the banks.
Banking communications
Examine how the bank interacts with you regarding transactions on the children’s account. Choose accounts that will notify you of such transactions by email and SMS. Some financial institutions may offer free quarterly statements and email alerts.
KYC requirement
If the account is for a minor under the age of ten, the minor’s date of birth proof as well as the parent’s Aadhaar and PAN will be required; otherwise, only the minor’s date of birth proof and Aadhaar will be required.
A Kids Savings Account is a great approach to teach your child about money management and saving. Your child will also learn about basic banking procedures such as opening an account, depositing money, and managing money in this manner.