Bank Accounts for kids – 3 Important reasons why you should open one
Banks have introduced several product in recent times that knowledge of banking products and functionalities becomes stale in a very short time, except if you work in a bank and not just that, you must be a marketer in a bank to have current updates about the dynamics of these hybrid liability generating products. Bank accounts for kids inclusive.
There are current accounts that now pays you interest on your bank balance; Savings accounts that allows you issue cheques to a third party; there are investment accounts that also allows cheque books and cash withdrawals directly. Just as there are loans tied directly to product purchase and sold; joint mortgage (mortgage taken by spouse base on their joint incomes) and many more.
One of such hybrid banking products is bank accounts for kids. It is called different names by different banks, but the underlying conditions are:
- It is opened in the names of children that are below the banking age (less than 18 years).
- It is operated by parents or guardian till the children are 18 when the accounts will be handed over to them.
- Some banks offer attractive interest rate higher than what is paid on savings.
- Some banks allow access to the account at any time while others restrict access to school fees payment only.
- Some banks allow the account to be drawn to the minimum while other imposes minimum balance criterias on the account.
- Most banks offer online banking, while some offers optional ATM cards for kids accounts.
So please confirm what your bank is offering and compare with other banks and make sure you are settling for the best deal.
Here are the most important reasons why we need to open bank accounts for kids.
- Helps teach your kids how to save money
If you are interested in inculcating savings habit in your children at a very young age, bank accounts for children is the best way to start them up.
A percentage of cash gift at birth, especially the ones giving to the children at naming ceremonies and child dedications may be used to open an account in their names. Some experts recommend that 30 percent of all cash gifts as they grow older be deposited into the account, the child should however be informed of the accounts and how the cash deposits are growing the balances.
Your child should know at a young age that not all money available to them should be spend on their wants. Account in their names, that they are aware of and with growing balances is one of the ways to inculcate savings in their subconscious.
- The account provides easy funding for their education
For parents who are looking for easy and stress-free ways to fund their children education, bank accounts for kids is a great way to sort that out. Parents can approach their banks after the child account have been opened and request for a monthly or periodic debit standing order on their personal account to the children’s account. This is a street free way to save part of your monthly income for school fees and other children responsibilities. You can however graduate the amount as the need for higher funding arises.
- Special recognition on kid events, occasional gift and scholarships from banks
Most of the banks where you can operate children accounts have invented incentives for parents who patronize their children accounts. Children Day celebrations, Birthday gifts and even scholarships are some of the ways in which banks attracts patronage for their kid accounts. Gifts and scholarship are however subject conditions such as balance on accounts and years of operations. Raffle draws are held by some banks to select winners for scholarships and other prices.