Banks offer a range of savings account options to accommodate the diverse needs of their customers. These accounts may vary in terms of how they are opened, their features, and their benefits.
This article will focus on child savings accounts and provide key considerations for opening one. But first, let us define a child savings account.
What is a Child Savings Account?
A child savings account is a financial product designed for minors between the ages of 10 and 18. The account is typically opened and managed by the child’s parent or guardian. Opening a child savings account may involve a different set of requirements and offer different benefits compared to regular or employee savings accounts.
Some key points to consider when considering a child savings account include the necessary documentation, potential benefits, and any other relevant details:
- Child savings accounts are available for minors between the ages of 10 and 18, with the permission of their parents or guardians.
- It is necessary to link a parent’s or guardian’s account to a child savings account.
- If the minimum balance requirement is not met in a child savings account, the amount will be deducted from the linked parent or guardian account.
- Child savings accounts can help encourage children to develop a habit of saving money.
- Child savings accounts offer many of the same features as regular savings accounts, such as a passbook, email statements, balance inquiries, an ATM/debit card with daily withdrawal limits, and more.
- When a child reaches the age of 18, the child savings account becomes inactive and 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:
- Visit the nearest bank branch to open a child savings account.
- Speak with a bank official to obtain an application for a child savings account.
- Complete the application and provide any necessary supporting documents, as well as those of the parent or guardian.
- After submitting the documents, the bank official will review them in order to process the child’s savings account.
- Once the account has been opened, the account holder will receive all necessary account credentials.
Things to Know Before Opening a Child Savings Account
Consider the following factors before opening a child savings account:
- Some banks may require a parent or guardian’s account to be linked to a child savings account for children under the age of ten, while children aged ten to eighteen may be able to operate their own child savings accounts.
- A child savings account becomes inactive once the child reaches the age of 18, at which point it must be converted to a regular savings account.
- To receive transactions or other banking information, it may be necessary to enable the SMS or notification feature.
- Child savings accounts may have a minimum balance requirement that the account holder or parent or guardian must maintain.
- It is important to familiarize oneself with any daily, monthly, or yearly withdrawal limits on the account.
- Additional parental documents may be required for the child savings account’s KYC (Know Your Customer) process.
- It is advisable to check if the bank offers protection against online theft, lost ATM or debit cards, 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 the minor, such as an Aadhaar card and birth certificate.
- Documents of the parent or guardian, such as a PAN card and Aadhaar card, for verification purposes.
- A recent passport-size photograph of the applicant.
- Proof of address.
- Proof of the relationship between the minor and the guardian or parents.
A child savings account can be a useful tool for teaching children about the importance of saving money and basic banking concepts. These accounts often pay interest on deposited funds and require parental or guardian supervision to remain active. Using a child savings account can be a great way to encourage good financial habits in your child.