- Opening a savings account for a child gives them a financial head start in life.
- Indian banks offer two types of minor savings accounts, depending on the child’s age.
- Junior savings accounts can offer as much as six percent interest per year.
Teaching your children the value of money and the benefits of saving when they’re still young is a gift that benefits them for the rest of their lives. Kids’ savings accounts can offer good interest rates, and they often have fun perks or little extras to encourage kids to put some of their pocket money away each week. If you’re not sure which savings account is the right one to open for your child, read on for a list of some of the best Indian bank accounts aimed at children and the interest rates those accounts offer to young savers.
Why Open a Savings Account for Your Child
Habits learned in childhood can last a lifetime. Giving your child the chance to learn about money when they’re still young helps them become independent and make smarter decisions about money. Opening a savings account for your child gives them the chance to watch the value of their savings mount up, so they learn how satisfying it can be to save toward a big goal or just put something aside for a rainy day. As an added bonus, they get to practice some valuable numeracy skills, too.
What to Look for in a Junior Savings Account
It can be tempting to open a junior savings account with the same account type you have for your adult savings, but this isn’t always the best decision. Some banks offer much higher interest rates than others, and some provide fun apps or informational materials you can use to teach kids about savings, interest, and money management. If you want to make saving money fun, it’s a good idea to pick a bank that caters well to children rather than focusing on brand loyalty.
Kids Under 10 Need Parental Permission
Children between the ages of 10 and 18 can control their own accounts once they’ve been set up. Children under 10 need permission from their parents to perform transactions. Most junior savings accounts offer features for parents to monitor the account’s status and either receive statements in the mail or get SMS notifications when the child withdraws money. Many accounts also limit daily withdrawals, reducing the risk of a child being scammed and having their account drained.
The Best Savings Accounts for Children
Most banks offer an account for minors, but the features can vary wildly between banks. Read on for a list of some of the banks offering the highest interest rates for young savers as well as some of the most fun features or easy-to-use apps that make the saving experience friction-free for your children. Choose one of these accounts to give your children sensible money habits that can serve them well when they become adults.
Kids Advantage Account from HDFC Bank
This account functions just like a regular current account but is open to children aged under 18. It includes an ATM card that can be used as a debit card and even works internationally. This means kids can feel truly grown-up and in charge of their finances if you take them on holiday. The Kids Advantage account comes with education insurance cover, so your kid’s education is taken care of in the event of your death.
SBI Saving Account for Minors
SBI offers a savings account for minors with an interest rate of 2.7 percent. The account has two categories — Pehla Kadam for under 10s and Pehli Udaan for over 10s. The Pehli Udaan account allows the child to manage the account themselves. SBI’s Saving Account for Minors includes an ATM/debit card embossed with the child’s name and a mobile app, so kids with access to a smartphone can enjoy the feeling of being in charge of their funds.
Young Stars Account from ICICI Bank
The Young Stars Account from ICICI Bank is positioned as a savings account, and this is made clear by the fee structure, which involves a monthly fee if the balance in the account drops below INR 2,500. As long as your child sticks to the account limits, they can take advantage of the Money Multiplier facility. This earns them regular interest payments while still allowing them to access their money using their debit/ATM card at any time.
Kids Bank Account from Bank of Baroda
The Kids Bank Account from the Bank of Baroda is open to children under the age of 18, but those under 10 need to have permission from their parents to operate the account. The parent or guardian receives an SMS whenever there’s a transaction on the account, so they always know what’s going on with their child’s money, and they don’t have to worry about the risk of their child falling for scams or fraudulent transactions.
My Junior Account from Kotak Mahindra Bank
The Kotak Mahindra Bank offers an account for kids called the My Junior Account, which currently has an impressive interest rate of 3.5 percent. What’s particularly interesting about this account is that if parents/guardians have an account with the bank, they also can earn this interest rate on their cash savings. Accountholders can take advantage of a variety of discounts and special offers at various retailers, ranging from restaurants and toy companies to educational platforms.
Future Stars Savings Account from Axis Bank
Axis Bank runs the Future Stars savings account, which offers interest of up to four percent on savings. The account comes with accident insurance cover (for the child), and kids over 10 can have a debit card in their name. Interest is earned daily and paid quarterly. One thing that makes this account particularly appealing is that it has relatively low balance requirements compared to some of the other high-interest savings accounts in this list. This makes it a great option for lower-income families hoping to teach their kids good financial habits.
Power Kids Account from IDBI Bank
The Power Kids account from IDBI Bank is designed to be an accessible, easy-to-use piggy bank for children. Kids get a passbook, a personalized cheque book and an ATM card. The account comes with accident insurance for the child and has low deposit limits, making it accessible to most families. Guardians can request monthly statements sent out by mail. Accountholders can take advantage of five free withdrawals at non-IDBI bank ATMs, so they always have access to their money.
PNB Junior Savings Fund Account
The PNB Junior Savings Fund Account is open to children of any age but must be opened via their parent or guardian. Unlike other accounts, it requires no minimum balance requirement, and there are no fees to maintain the account. The account can be used to pay school or college fees, but there’s no overdraft facility. An ATM card and cheque book are provided as standard along with online banking and mobile banking features to allow children to keep an eye on their funds.