Is there such thing as a kid-friendly bank account?

by Stacy Francis, CFP®, CDFA

Have you ever given a dollar to your child and seen the expression of awe on their face? Imagine how that expression can change in a few years when they have their own bank account that has increased because of interest.  

The problem?  The high fees on low-balance bank accounts mean kids are likely to end up losing money. An ordinary savings account usually requires a balance over $200 to avoid those annoying monthly fees of around $3. This means that a child may pay $36 a year in fees and only earn 50¢ in interest.

The solution? Fortunately, many banks offer a no-fee, no minimum option for minors; however, they do not always advertise that fact–YOU have to ask. If you are lucky, you may find that some banks offer bonuses for kiddie savers like higher rates and prizes for deposits. Compare terms at local banks to find the best deal.

Keep in mind.. What matters most is the experience kids get when they go to the bank to hand over cash and they learn to feel good about saving money. This may be the best financial lesson you can give them.

 

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