It is never too early to teach your children about money management. A study by Brown University found out that the routines and habits are solidified by the time they are nine years old. A great way of establishing healthy financial habits is by opening a savings account for your child. With saving bank deposits, you can familiarize your child with the basics of good money management.
However, there are some things you should consider before choosing the right savings account for your child. Here are some of them.
It is important that you know the daily spending limit of the account, as well as the yearly withdrawal and spending limit. The limits vary from bank to bank, from ₹1,000 per day to ₹5,000 per day. Certain banks also impose a limit on the total number of debits in an account during a financial year. Then there are banks that allow children to make transactions after reaching a certain minimum age. It is a good idea to keep the daily limit low for a child account.
Transfer of Funds
It is a great idea for parents or guardians to ensure that their child’s account has a standing instructions facility. This facility allows money to be debited from the parent’s account and credited to the minor’s account regularly. Also, only inter-bank transfers are allowed, in the case of most banks. Look for banks that allow unlimited transactions for free. This also increases the long-term savings of your child.
It is a good idea to deposit your money in a savings bank account that requiresa low minimum balance. There are also some banks that do not levy any minimum balance requirement in case of a minor’s account. However, such accounts do require a standing instruction from the parent’s account. There is a minimum amount that must be transferred each month.
It is important to know how the bank communicates with the parent regarding transactions the done by the child. It is best to choose a bank that communicates all the information about the transactions via SMS or email. Free quarterly or half-yearly statements are also provided by certain banks.
When you open a savings bank deposit account for your child, it often comes with a debit card. Keeping their child’s debit card safe should be one of your top priorities. Look for accounts that provide zero liability security. This feature provides protection for the debit card against theft, misplacement and unauthorized transactions. All you need to do is inform the bank within a certain period.
Look for a bank that has a branch near your house. While online banking brings great convenience for adults, taking your child to a branch location can be a great learning experience. Getting your child to physically withdraw and deposit money can make it a more educational and memorable experience for them.
Apart from these, look for the banks that offer you good savings account interest rate. There are some banks that offer an interest rate of up to 7%.