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7 Questions to Ask before Opening a Kids' Savings Account


Opening up a kids savings account is a great way to get your children involved in learning how to manage money in today's modern financial world. These starter accounts can teach kids the value of savings, and help them understand how they deal with money when it's not in their pocket. However, some beginner savings accounts are different than others. Here are some good questions to ask at the teller desk when you're setting up an account for your child.

1. What Are the Documentation Requirements? 

You may want to ask this question over the phone before you take your kid the whole way down to the bank. The bank may require your Social Security number, as well as that of your child, along with proper forms of I.D.

2. What's the Interest Rate?

Back when some of us were kids, conventional savings accounts earned up to 5% annually or more. That meant you could see small sums of money grow over time. It's a little harder with today's interest rates, but it's still a good idea to get access to the best interest rates, so that you get a little return on the cash that you put into the account over the years.

3. What Are the Fees on This Account?

Nowadays, it seems like every bank account includes fees. Banks charge these according to minimum balance requirements, account maintenance and even numbers of routine teller visits. That's why customers have to ask up front about what fees are attached to an account to prevent some of your savings from eventually being eaten up by administrative banking fees.

4. Is the Account Federally Insured?

The FDIC or Federal Deposit Insurance Corporation insures conventional savings accounts up to a certain threshold. However, now banks are pushing a new kind of savings account called a "money market account" and some of these accounts may not be insured in the same way. Take time to talk to your bank about how your child savings will be reliably stored away for the future.

5. What Happens When My Kid Turns 18? 

If you're opening up a savings account for a minor, you're probably opening up what's called a custodial account. This can raise questions about access for the account holder when they turn 18 or "become emancipated" from a minor into an adult.

6. What Does this Bank Offer to Young Account Holders? 

Some banks offer specialized "savings passbooks" or other tools to help kids understand the value of their account over time. This will come in handy when you are using the account to help explain personal finance to your child. Make sure you ask about any special services that the bank provides for those involved in custodial accounts.

7. What about My Spouse or Other Guardians?

In a custodial account situation, you may want to nail down the details about who else may have access to the account. Usually, it's pretty straightforward and the account access is restricted to the joint account holders (you and your child) but asking questions can make this kind of policy clearer to you.

Think about all of the above when you are looking at setting up a new savings account for your kid.

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