Setting up a bank account for your kids is a big deal. This is the first step towards admitting that they are getting older and must learn to be financially responsible. Some parents may look forward to this day while others aren’t quite ready. With that being said, it’s important to know what to look for when choosing a bank for kids, because this is their first experience and you want it to go well.
Not all bank accounts are appropriate for kids, and you also might want to think about what the account is for – is it for long term or short term saving, is it to have a place to put all those quarters your kids have in their piggybank, is it to manage their allowance or birthday money, is it to have an overview over their financial habits or is it to make their spending easier. Here’s what to look for.
Low Minimum Requirements
Your first step would be to make sure that there are low minimum requirements. While some banks have kids savings account options, other banks are doing away with that option. Learn what each account will require for a minimum balance upfront and on a daily basis in order to avoid high fees or having the account close out.
These days most banks are FDIC insured, but you may find some that are not. Make sure that the bank you are thinking about using for your kids account has some level of insurance on the money your kid will be depositing. This is important because you never know what the future holds and you never know if the bank could go downhill, leaving your kids money to some big corporation versus back in their own pocket.
Adult Signature Required
It is important to find out if your kids can take their own money out at any time without the parent’s signature. This is especially important when setting up a bank account with your name attached for a minor kids’ account. When your kid is under 18 you may not wish that they have this type of access to their funds. Find a bank account that will only allow withdrawals if the parent and kid sign at the same time.
Part of teaching kids to be financially savvy is to allow them access to review their money on a regular basis. A weekly view at their bank account online to showcase spending and saving will truly help them learn the concept of money and banking. Ask if the kid’s bank account will come with an online login so that they can see their account from the home computer at any time. This is important as you work to teach kids to track their finances so that they can become financially smart adults.
There you have it, a few things to look for when choosing a bank for kids. It’s not an easy process, but it’s important to go through and select a bank and particular bank account option that will work best for your kid. Be certain to have your kids go through the selection process with you so that they learn the steps involved in picking the right bank to do business with..