Savings Account for Minors

Secure the financial future of your child with a Kids Savings Account

Key Takeaways

• You can open a Savings Account for your infant from the first day of their birth.
• You can operate the account as a parent or guardian until your child turns 18.
• You can use the savings to finance your child’s higher education.
• Saving money early on will help the child understand the importance of saving.
• Few banks also offer investment plans for child education in the form of RD.

Introduction

While the joy of putting a coin in a piggy bank is still relevant, parents have turned to banks in order to start saving money for their children. We, as adults, have realised the importance of saving money in banks quite later in our lives. Imagine if you can do that for your children from the day they were born. How secure will you be making your child's future!

With banking becoming an integral part of our lives, familiarising your children with the basics will only prove beneficial. Banks offer an impressive range of accounts, including a special savings account for children. Opening a savings account when your child is an infant, depositing money in it frequently, and inculcating the proper savings discipline can help your child understand the importance of saving and spending money wisely. Find out all about bank accounts for kids in this article.

Kids Savings Account – Salient Features

• You can open a bank account for kids from the day of their birth, i.e. when your baby turns one day old.
• Your baby should be named as the primary account holder, whereas you (as the parent or guardian) can be the secondary holder.
• You can operate the account on behalf of your minor till they turn 18.
• Once the child turns 18, the account can be converted to a regular savings account. A Child Savings Account works in the same way as a regular Savings Account, earning annual interest on the deposited funds.

How to Open a Bank Account for Kids – Process and Documentation

You can open a child savings account by visiting your bank. You need to fill the account opening form and provide the below documents to open the account.

• ID proof documents of the parent/guardian – e.g., PAN, Passport, Aadhaar, Driver's License, Voter's ID etc.
• A photograph of guardian/parent is required.
• Birth certificate of minor/any other age proof required.

Benefits of Bank Account for Children

• The account comes with options of Net Banking, Mobile Banking and Debit cards. Debit card can be given in the name of guardian/parents.
• Debit cards provided with these accounts generally have a withdrawal limit.
• While some banks need you to maintain a monthly average balance (MAB), other banks offer a no-frills or zero-balance account.
• Few banks offer Free education insurance coverage on these accounts
• Some banks allow you to open both a savings account and Recurring Deposit (RD) with the bank account for child.
• Sums deposited into this account can be used to fund the child's higher education.
• You can deposit the cash gifts received by the baby on various milestones – birthdays, festivals, cash prizes won at school, etc.

Conclusion

Introducing your children to banking at an early age will help them understand the importance of banking and the value of money. If parents save money on behalf of their children from their birth, by the time the child is grown-up, there would be sufficient money for their disposal. You can use this money to ensure that the child gets proper education and facilities in future.

Frequently Asked Questions

1. How does the monthly interest credit for savings account work?

   Interest on savings accounts is usually calculated by banks every day using the closing balance. In other words, the money you save every day earns you interest. It is possible that the interest won't be added to your account every day. A lot of institutions give interest on a monthly, or quarterly basis.

2. Is it mandatory to open a parent's account with DBS Bank, prior to opening a minor account?

   No. Opening a savings account for your child at DBS Bank is a relatively simple process. All that’s needed is identity proof and documentation of the guardian, as well as the birth certificate of minor/any other age proof. The account can be opened as early as the day of the minor’s birth.

*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.