Starter Savings for Children

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Make Saving Fun for Your Child

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Starting a Savings Account

I am wanting to set up a saving account for my daughter, but do not want to worry about service fees, minimum balance, etc. Is there any financial institution out there that caters to children trying to begin saving and learning the benefits of it while they are children?

Credit Unions

Check your local credit union for help with teaching your children about saving money. Our credit union has a "Scottie Dollar Club." There is no minimum balance, no fees, and each time our children deposit money they receive a Scottie dollar. Then a few times a year they open a Scottie store. It has small items that children can buy with their Scottie dollars. The child also receives a register book, and the teller records the child's deposit and brings the balance up to date. Quarterly, account holders receive a statement in the mail telling the balance and activity, if there has been any. Both of our children have an account, and they cannot wait to put money in it. Add to this some discussion of the importance of saving and using money wisely, and as they get older, the importance and benefit of interest. Your kids will have a good foundation and have a little fun getting it.

The Bottom Line

As long as you open the savings account listing the child's name, their social security number, and their birth date, the financial institution will not charge a service fee until the child turns 18.

Different Banks, Different Programs

Call your local banks about children's programs. Our Citibank has a savings program for children. They had a promotion where you could open a Kid's account with $10 and they would match it with $10. Then they gave each child a Little Account Book along with a "Savings Calendar" that had interesting tips on how to earn and save money. During the Holidays they always give away gifts to the kids as well as give them a tour of the bank. I don't know if this is a national program but you may want to check it out. There are no fees or minimum balance needed.

Insider Insight

I work for a large bank that is based in Pittsburgh, PA. We set up savings accounts for minors under the Universal Gift to Minors Act. The account is usually titled under the child's name with one parent as custodian. It has no balance requirements and receives no service charges until the minor turns 18. As an added benefit for parents, the minor can make no withdrawal transactions on the account unless the custodian is present and has signed for the withdrawal.

Minor accounts are generally only available in a bank's lower level of savings account. For example, you cannot title a FDIC Insured Money Market Account as a minor account. Almost all banks will offer you some type of a minor savings account, but the rules governing the account may vary from state to state. My suggestion to you would be to stop in the local branches of banks in your area and ask questions about what's available. Always ask a "platform rep", the sales/service people who tend to sit behind the desks at the front of the bank. Tellers receive only minimal training in accounts, while platform reps receive both teller training and in-depth account training. Start at your bank since you may be able to find package deals and you're more likely to be working with somebody who already understands your needs at an institution where you have an established relationship. From there, see about getting some information from both the large banks and the smaller local banks in your area.

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Many times you can get information from a small bank and then take it back to a larger bank for them to match the deals offered. This gives you the good deals that are available at smaller banks plus the service you would expect from a larger corporation (internet access to your accounts, 24/7 phone support, longer hours, etc.). Whenever you set up a new account, keep in mind that banks are, at their heart, businesses. Like any other business, they're all competing for your business. If you shop around, you'll find great deals.

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