Things to Consider Before Opening Kid’s Savings Account
It is always better to start saving and investing in the names of your children when they are grown up.
One can start by saving a small amount on a regular basis. Disciplined savings habits are essential for making any investment.
If saving is difficult, one can open a separate account in the name of a minor and start a recurring deposit. Which will help in saving money and can be used for future fee payments or to make any investment.
Here Are Five Things to Know About a Minor Bank Account:
1) Banks are permitted to open such minor’s accounts as savings deposit accounts with the mother as the guardian.
Since the parent is not allowed to overdraw, it is always in credit. So that they remain in the account and do not use it for unnecessary things.
2) Minors over the age of 10 can open and operate bank accounts at their own will. While the bank has all the rights to fix limits in terms of age and amount, keeping in mind the risk management systems,
3) You can avail of additional banking facilities like internet banking, debit cards, and checkbook facilities. A checkbook will be issued to the guardian in the name of the minor.
4) On attaining majority, the minor should verify the balance in the account and ensure that the account is operated by the natural guardian only.
5) Fresh specimen signatures and other instructions should be obtained and kept on record for all work to be done.
Such accounts can be opened to help your child understand the importance of money and control his spending habits.
For Children
- Date on the birth certificate
- Birth registration certificate
- Report card showing date of birth
- School ID card mentioning photo and date of birth
For Parent
- Declaration of a minor to be signed by a guardian
- Photo of a parent
- Signing the Account Opening Form
- If he is not the natural guardian, then he must be appointed by the court.
Tax Saving
The interest income earned from the minor account will be clubbed with the income of the guardian and taxed as per the income tax slab.