Skip to main content

Junior bank accounts

IF YOU’RE one of those who started a bank account when you were 18 and about to leave home for college, refrain from passing on this piece of information to a young person if you want to protect your dignity. Otherwise, be prepared to see the smirk and hear the condescending tone of a four-feet something person, elaborate on how he/ she was exposed to banking at the age of 10.

Exposure comes early these days. Kids aren’t content with paper money or being the banker in a game of Monopoly. They want to be a part of the real financial system and enjoy the benefits that their parent’s have- like having an account of their own, using an ATM card to withdraw cash, having a debit card to occasionally go shopping and so on. Most banks in India now provide the opportunity to start a savings account in a child’s name.

KNOW THE BASICS

Junior accounts in most banks are available for children up to 18 years of age. However, the minimum age to start such an account could be as low as one day. Before going any further, it must be clarified that while this may be in the child’s name, operating this account is possible only under the guardianship of a parent or a legal guardian. While the parents may ask for a particular amount to be diverted to this account on a steady basis, children also have the opportunity to depositing their savings into this account. Depending upon the bank, a minimum balance may also have to be maintained.

WEIGH THE BENEFITS

Starting such an account is not just about providing your child a source of cash and making him/her feel good. The attempt is to ingratiate the child into learning how the financial system works and to inculcate a sense of discipline especially when it comes to using ATM and debit cards. The child also inculcates the habit of savings and budgeting, by ensuring that surplus money they receive through various sources like pocket money, gifts, scholarships etc is deposited in their bank account. Moreover, it also gives children, particularly those in middle school, to practically understand the concept such as interest. For parents, this is also seen as a way of building up a cash store not just to deal with your child’s current needs but also for the future needs. This also ensures that a steady income is diverted on a regular basis.

EXERT PARENTAL CONTROL

To prevent parents from worrying about the misuse of money and cards, banks provide parents/guardians with scope to exert a great deal of parental control over a children’s account. It is predominantly up to the parent whether he/she wants an ATM or debit card to be issued. Even when such cards are issued, the bank allows the parent to determine limits regarding the amounts that can be withdrawn using an ATM or spent using a debit card. Moreover, for any transactions done using cheques, the signature of the guardian on the cheque is essential. The passwords necessary to conduct transactions online or over the phone are also given to the guardian and they are encouraged not to divulge these readily to their children. Apart from sending a quarterly physical statement or a monthly e-mail statement to the parents, the bank also sends free SMS/e-mail alerts to parents if the transactions conducted by the child crosses the threshold level.

CHECK OUT THE BENEFITS

In some banks, there are certain benefits that you are offered if you have a children’s account. HDFC’s Kids Advantage Plan offers free education insurance cover of about Rs 1,00,000 in the event of the parent’s death in a vehicular accident. Also, when the funds in the account exceed or reach a particular amount, then the bank automatically transfers some part of it into a fixed or term deposit.

STEP BY STEP

  • To start such an account, you will need documents which prove the child’s date of birth
  • The guardian also needs to submit documents to prove his identity, address and his relationship with the child

There are specific accounts which can be operated by children alone but the age and the mode of transaction varies from bank to bank. At Punjab National Bank, students above the age of 10 can open zero-balance accounts and are given both ATM cards and cheque books. However, at HDFC, the self-operated account for minors is available for children above 12 but the minor will be forced to conduct all transactions at a bank branch.

Popular posts from this blog

Rs 14,000 Crore worth of tax free bonds coming soon from NHAI , PFC

  NHAI, PFC file prospectuses, coupon rate not yet decided MORE debt investment options have opened up for investors with AAA rated tax-free bonds worth over Rs 14,000 crore lined up. The National Highway Authority of India ( NHAI ) and Power Finance Corporation ( PFC ) are offering Rs 10,000 crore and Rs 4,033.13 crore worth of tax-free bonds, respectively, as per prospectuses filed with the Securities and Exchange Board of India (Sebi). Of a Rs 5,000 crore issue by PFC, Rs 966.87 crore has already been raised through private placement on September 28 and November 1. Tax-free bonds give investors tax-free return on any amount invested. In another kind of bonds, the long-term infrastructure bonds, investments up to Rs 20,000 are tax exempt, that is this cap amount can be deducted from the taxable income. Accordingly, the NHAI prospectus has clarified that only the amount of interest from -and not the actual investment on -its new bonds will be tax-free. "NHAI's publ...

Change in Fund Manager for some of HSBC Mutual Fund Schemes

Buy Gold Mutual Funds Invest Mutual Funds Online Download Mutual Fund Application Forms Call 0 94 8300 8300 (India) However, this facility is only available to Unit holders who have been assigned a folio number by the AMC.   HSBC Mutual Fund has announced that the below mentioned schemes shall be managed by the new fund managers as stated in the table. The effective date will be July 02, 2012.   Amaresh Mishra 's will be Vice President and Assistant Fund Manager. Having done a Post graduate diploma in Business Management and Bachelor of Chemical Engineering, he has over seven years of experience in Equities and Sales.   Mr. Piyush Harlalka's designation shall be Vice President- Fixed Income. Qualified as a C.A., C.S. and holding M.B.A.( Finance degree), he has over six years of experience in Fund management and ...

How EEE and EET Tax affect Retirement Investments

  An important factor while choosing a financial product is its taxation , and for retirement savings, this is even more important as the sums involved are usually life-long savings. Here's a look at the current tax treatment of three major long-term retirement planning products, which are - Employees' Provident Fund (EPF), Public Provident Fund (PPF) and National Pension System (NPS). EPF The tax treatment is EEE, which means your money is exempt from taxes at the time of investment, accumulation and withdrawal. At the time of investment, the tax deduction is under the limit of section 80C of the Income-tax Act , which is currently Rs 1.5 lakh. Partial withdrawals are also tax-free if made after 5 years of continuous service. If withdrawals are made before 5 years of service, 10% tax will be deducted at source. Exceptions have also been provided for transfer of amount and conditions wherein the subscriber is unemployed for more than 2 months or the loss of job was beyond th...

Personal Finance: You can insure your wedding

But luck may not always be on your side. With the frequency of such attacks, as also other risks and unforeseen accidents growing, a wedding insurance is something you may want to look at if a marriage is being planned in the family. Event insurance plans like this is still in its nascent stages due to low awareness. And given the sacred nature of the ritual, nobody wants to discuss or think negative. But as wedding spends and risks grow, it makes sense to cover the potential monetary loss. The policy in those countries even covers the loss of the wedding ring, the wedding gown not reaching on time and even the expenses/loss due to late or non-appearance of the photographer which may mean staging the event once again for the photograph. In India, most insurance companies — including ICICI Lombard General Insurance, Oriental Insurance, Bajaj Allianz and National Insurance — offer wedding insurance. The policy is tailor made to individual requirements and needs. The sum insur...

DSP BlackRock MidCap Fund

Best SIP Funds Online   HOW HAS DSP BlackRock Small & Mid Cap Fund PERFORMED? With a 10-year return of 14.61%, the fund has outperformed both the category average (12.34%) and the benchmark (10%) by a good margin. Should you invest in DSP BlackRock Small & Mid Cap Fund? This fund invests predominantly in mid-cap stocks but takes a sizeable exposure in small-caps as well. The focus is on nascent companies with high growth potential. The fund manager places emphasis on quality and avoids inferior businesses even if these look tempting from a valuation perspective. Over the past year, the fund portfolio has grown, having added to some of the underperforming sectors like chemicals and healthcare. Its portfolio churn has come down significantly. The heavily diversified portfolio is run completely agnostic of its benchmark index— most bets are from outside the index—which can at times lead to bouts of underperformance as seen in the recent years....
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now