Kids Savings Bank Account – What parents should know about it?
Kids Savings Bank Account – What parents should know about it?
In order to create the habit of savings in the kids / minors and to get them acquainted with the complex procedure of the banking system, the Government started up with the opening of savings account in the name of children who are a minor i.e. below the age of 18. This is called Kids Savings Bank Account. What is kid’s savings Bank Account all about? What parents should know about these S.B Account so that they can teach them to their kids / children? Which is the best bank for children's savings accounts?
What is Kids Savings Bank Account?
Many banks are offering Kids Savings Bank Account which is offered for minors below 18 years of age. They can be operated individually by the minors themselves or together with their guardians. It is a miraculous way to show them the importance of savings together with fun and learning. Many private banks also started opening accounts of minors with many attached features like issuing of debit card, cheque book, ATM card etc. with the prior permission of parents or guardians. HDFC Bank, Kotak Mahindra Bank, Capital 360, IDBI, YES Bank to name a few private sector banks. Limits and restriction features are attached to the card to prevent them from being misused like you cannot withdraw more than Rs. 2500 through your ATM card.
Also Read: Top and Best Ways to create multiple incomes
It is a great way to teach them how to manage the valuable money while accumulating funds for their future. Parents can always keep a keen watch on the activities of the kids that they are not misusing the funds through active mobile messaging system, restrictive limits, net banking etc.
Best Kids Savings Bank Account from SBI
With an idea of making the minors aware of the modern banking system, the State bank of India introduced two types of saving accounts for minors.
Pehla Kadam from SBI
- This bank account can be opened by minors of any age.
- It is operated jointly by the parents or guardians.
- There is no minimum balance required.
- The cheque book and photo ATM cum debit card are issued under it.
- The facility of net banking and mobile banking is also attached with the certain restrictions in order to prevent the misuse by minors.
- The interest rate is 4% p.a. calculated on the daily balance.
Pehli Udaan from SBI
- It can be opened by minors who are above the age of 10 and can sign uniformly throughout.
- The account is opened solely in the name of the minors who can operate them single handedly.
- The features of Internet and mobile banking are attached, but with a limitation.
- A personalized cheque book is also issued with ten cheque leaves.
- It also offers 4% p.a. interest calculated on the daily basis.
- Overdraft facility is prohibited.
Some more Best Kids Savings Bank Account from other banks
- ICICI bank also facilitates its customers to open their account on the same criteria in the names of young star and smart star savings account.
- AXIS bank offers the kids account in the name of the Future Stars Saving Account with a minimum opening balance requirement of Rs. 2500.
All the private banks also work on the same frame of guidelines and with same features and nearly the same interest rates. It is generally suggested that the kids saving account should be opened in the same bank in which the parent/guardian is operating his own account. This is due to the reason that they can have an eye on the activities of the kids. Moreover, inter account funds transfer also becomes easy.
The kid’s bank account is opened with an object to infuse a sense of financial responsibility in the kids. A parent has to be equally watchful and careful about the misuse of the funds. Moreover, they have to spend time with the kids to teach them each and every detail of the operations. At times, the count becomes dormant due to lack of transactions and the account just becomes a toy of two days in the hands of kids.
Advantages of opening a Kids Savings Bank Account
With the advancement in economic growth, now more children are seen in actively participating in shopping malls with their parents. This is because they are more liberal in spending and have more money in hands than before. But, it increased the dilemma of the parents as to what should be the right limit. The answer to this is the ‘spending and saving plan’. The kids saving accounts really instill financial discipline in a child by introducing him to the banking world. They are now aware of the fundamentals of banking transactions and facilities like debit card, fund transfers, cheque books and other terms which they might find difficult to understand without the practical knowledge. One can even inculcate the habit of savings. You can also provoke the kid to promote the products like to start a small recurring deposit or small SIP in the mutual funds in his name and help the child to understand how the investment is performing.
Disadvantages of Kids Savings Bank Account and problems associated
With the opening up of an account in the name of a kid also opens up opportunities for the anti-social elements for fraud and misuse. The cheaters may ask the kids about the bank details like user name, password and misuse them in a multiple ways. This account is similar to the normal saving account. The only difference is that it is opened in the name of a minor. So the costs of operating an account are also associated with it. Banks charge a certain amount for the cash transactions exceeding the limit. There are many chances that kids may lose their debit cards. To add more, banks do not give any leniency to the customers just because it is a kid’s account. They charge heavy penalties for violation of minimum balance required.
Conclusion: Well, I feel it is a wonderful concept to open a saving account in the name of a kid only as far as parents are cautious about it and the child is responsible enough to handle the same. A fire can be used to cook food as well as burn home…so “teach carefully”. It is in the hands of the parents.
If you enjoyed this article, share it with your friends and colleagues through Face book and Twitter.
Kids Savings Bank Account – What parents should know about it