Banks have created various types of savings accounts in order to reach nearly all individuals and offer them the opportunity to save money. In terms of the account opening process, benefits, and features, all types of savings accounts differ slightly from one another.
In this blog, we will discuss a child savings account and the most important things to consider when opening one. Before that, let us define a child savings account.
What is a Child Savings Account?
A child savings account is a type of savings account for children aged 10 to 18. The child’s savings accounts are supervised by the child’s guardian or parents. The process of opening a child savings account differs from that of opening a regular savings account or an employee savings account.
The difference lies in the documents that are required to be submitted to open child savings accounts, benefits, etc. Following are some of the pointers about a child savings account-
- A child between the ages of 10 and 18 can operate a child savings account with the permission of his or her parents/guardians
- It is mandatory to link a parent’s or guardian’s account to a child savings account.
- In the event of a minimum balance requirement shortfall in a child savings account, the amount is deducted from the secondary bank account (parents/guardians account).
- A child savings account encourages a child’s habit of saving money
- The child savings account has many of the same features as a regular savings account, such as a passbook, email statements, balance inquiries, an ATM/debit card with daily withdrawal limits, and much more
- When a child reaches the age of 18, the child savings account becomes inactive; therefore, the child savings account must be converted to a regular savings account.
How to Open a Child Savings Account?
To open a child savings account, all a user needs to do is follow the instructions-
- Go to the nearest bank branch
- Connect with the banking official to get a child savings account application
- Fill out the application and submit the supporting documents along with the parents/guardian documents
- Following submission, the banking official will verify the documents in order to process the child savings account
- All banking credentials will be provided to the account holder once the account has been opened
7 things to know before opening a Child Savings Account
Consider the following factors before opening a child savings account:
- Some banks have made it mandatory to link a parent’s or guardian’s account to a child savings account (for children under the age of ten), whereas child savings accounts for children aged ten to eighteen can be operated by the child
- The child savings account becomes inactive once the child reaches the age of 18. As a result, converting a child savings account to a regular savings account is required
- To receive transactions or other banking information, the SMS or notification feature should be turned on
- Child savings account also requires a minimum balance requirement, thus, the account holder or parents/guardian should take care to maintain the balance
- Learn about the daily, monthly, and yearly withdrawal limits
- Additional parental documents are required for a child savings account KYC
- Check to see if the bank offers protection against online theft, misplacement of the ATM or debit card, and other risks
What are the Documents Required to Open a Child Savings Account?
The following documents are required to open a child savings account:
- Documents of minor like Aadhaar card, birth certificate
- Parents/guardian documents like PAN card, Aadhaar card and others for verification
- Applicant’s recent passport size photograph
- Address proof
- Proof of relationship between the minor and the guardian/parents
A child savings account is a great way to encourage your child’s money-saving habits. Such an account teaches a child the value of saving money as well as key banking terms. Interest is also paid on the amount deposited. Above all, parental/guardian supervision is required to keep child savings account active.