Are you considering opening a savings account for your child? If so, you are certainly thinking in the right direction because it is never too early to begin saving for college and other expenses which will appear from time to time. A savings account for your child will give you just the opportunity you need to get into the habit of saving with the interest of the child in mind.
You can open a savings account for your child in your name knowing full well that the money set aside is actually for the child. Moreover opening a savings account for your child will be an excellent gift because he or she could have a tidy sum of money in the account when it is most needed. As you are already in the planning stages of opening savings account for your child the information provided below will guide you appropriately in achieving your objective.
Open a savings account for your child as a cosigner
Children below the age of 18 are not legally eligible to sign documents as you are when you decide to open an account. However, you can still open a savings account for your child with both your names on the account. When your child becomes 18 years of age you can go to the bank and delete your name from the account. As your child is still a minor you would have the sole responsibility of controlling the account. You will be eligible to make deposits and withdrawals or close the account if needed.
A savings account for a child will attract fees
Savings accounts always attract fees but there are options to get around this fact. Have a discussion with your bankers to understand if they offer any accounts that can be connected to your checking account because it will help you to avoid paying unnecessary fees. You can also find a number of options by conducting an online search because online banks may offer savings accounts without any fees being charged and this option may also be available with the local credit union.
You should be prepared to conduct some research about these types of accounts because some banks are willing to waive charges if you are prepared to leave a minimum balance in the account. Just ensure you read the fine print on the account so that you get an understanding of any fees that may be charged and can have a finer sense of control over the account.
Open a savings account for your child close to your home
The bank chosen to open a savings account for your child should be located close to your home. As an adult, you will find it beneficial to use online banking but when your child begins to grow you will want to take him or her for a visit to the bank where the money is deposited. If the bank is located close to your home your growing child will have opportunities to make deposits regularly and appreciate the value of saving. Your baby will not be concerned right now but your growing child will love to visit the bank and watch how much money he or she has saved.
The interest rates
The interest rates on savings account can at best be called dismal. Most banks are not generous in offering interest rates and perhaps you can find the best rates of interest by looking at the credit union in your locality. Have a discussion with your local bank about any programs they are offering which may provide you interest rates. If your intention is to ensure that your child earns more interest when growing you should consider moving the funds invested into a certificate of deposit or investment account because you can get attractive interest rates and make it better for your child to receive a good return on investment.
Teaching your child the value of saving money should be a lesson which should be imparted at an early age of life. You don't have to set aside 10 or 15% of your income as you do towards your retirement. The habit need not be expensive or tedious because you always have the option of setting aside small sums of money in the account because it is guaranteed to be a source of pride for your child who is growing up.
