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
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.
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.
