A Child Savings Account is a sort of savings account for children under the age of eighteen. This Savings Account is supervised by the child’s parents or guardians. Starting a Child Savings Account is different than opening an Employee Savings Account or a Standard Savings Account.
The key distinctions are the documentation that must be presented in order to start a Child Savings Account, as well as the perks. Here are a few things to keep in mind when it comes to these types of savings accounts.
- With the agreement of his or her parents or guardians, a child between the ages of 10 and 18 may run a Child Savings Account.
- A parent’s or guardian’s account must be linked to the Child Savings Account.
- When the minimum balance requirement for a Child Savings Account is not met, the Bank imposed a fine that is either a percentage of the shortfall or a fixed amount, such as 500.
- The E-mail Statement, Balance Enquiries, Passbook, ATM Card, Daily Withdrawal Limits, and other features of the Child Savings Account are similar to those of any Regular Savings Account.
- When a kid reaches the age of 18, the Child Savings Account becomes dormant. As a result, the account must be converted to a Standard Savings Account.
Documents Required
- For verification, the guardian’s address and identity proof, such as an Aadhaar card or a PAN card, is required.
- The guardian’s latest passport-size photo.
- Minor’s birth certificate
- The guardian’s declaration
5 Things to Think About When Starting a Child Savings Account
Childs Age
According to the Reserve Bank of India, children over the age of 10 can open and operate bank accounts on their own (RBI). In this sense, banks have separated children’s savings accounts into two categories:
- Below 10 years of age
- Between 10 to 18 years of age
The account is transformed into a regular savings account once your child reaches maturity.
Limits Applied
When opening a bank account for your child, make sure to look into the specific spending and withdrawal limits for a children’s savings account. For example, one bank may set a limit on the number of debit transactions a child’s savings account can make in a given financial year.
Debit Cards
Banks now offer debit card choices to help popularise children’s savings accounts. A debit card can be a useful tool for teaching your child how to budget and track their spending using SMS and email alerts.
Minimum Balance Required
You must maintain a minimum balance in a children’s savings account. As a result, it’s critical to keep the account well supplied at all times to avoid penalties.
Internet banking & Mobile banking
Since the majority of banking transactions have moved online, now is a great opportunity to teach your child. How to manage their accounts from anywhere using the Internet. You might want to teach them about safety considerations like not sharing passwords and login IDs. When teaching them how to monitor their bank account.
Why should one open a child savings account?
Banking firsthand experience
Giving your kid cash for pocket money is no longer necessary when you open a savings account for them and deposit it directly into their account. You can also educate your kid on how to use their debit card to withdraw cash from ATMs and pay for goods at merchant outlets. Using a savings account interest calculator, we can calculate the interest rate.
Finance Managing
Kids can learn how to set spending limitations on their debit cards through their savings accounts. As a guardian, you can use the bank’s banking platforms — Internet and mobile banking — to send standing instructions from your account to your child’s bank savings account. Furthermore, you may easily transfer funds to your child’s account and invest on their behalf in a variety of investment products such as fixed deposits, mutual funds, securities, and other options.
Childs Future
Systematic Investment Plans allow you to invest on your child’s behalf using their bank account. SIPs started at a young age can assist optimize the potential of your child’s wealth over time.
Conclusion
Prioritizing the concept of saving over the concept of spending is one of life’s most essential money lessons. Opening a savings account for your child will help you explain budgeting concepts to them early because saving as a habit takes time to acquire. Is the first and most important lesson in money management for a successful financial life. Allow children to set spending limits and closely monitor their purchases.
