Children start saving money at an early age. Eventually they will need an alternative to their piggy bank to stash their cash. One of the best ways to teach children basic money skills is to have them open a bank account.
Once upon a time, youngsters would leave the bank branch proudly clutching a passbook for their new savings account. Maybe they received a new piggy bank and an activity book to teach them about money. They may have had a tour of the vault, collected some shiny loonies or perhaps a coupon to start them on their saving journey.
Banks used to offer kid-friendly online resources and activities. None of these kid-focused tools are available any longer (although according to the website, RBC does offer free financial planning and advice).
Considering that a good portion of young adults bank with the same financial institution they opened their first account with as young children, I think the big banks are really dropping the ball here.
Children’s Banking Options at the Big 5
Most Canadian banks do offer no-fee accounts for children.
Here’s an overview of the savings accounts offered by the Big 5:
|Bank||Account name||Age||Interest rate||# Trans||Other features|
|CIBC||Premium growth for youth||>18||0.15%||Unlimited||—|
|RBC||Leo young savers||>17||0.01%||15||$100 min. deposit|
|Scotia||Getting there youth account||>18||0.05%||Unlimited||Scene rewards|
|TD||TD youth account||>19||0.05%||Unlimited||—|
(* BMO no longer offers a children’s savings account. This is a chequing account)
With TD and RBC, parents can set up a regular transfer from their account to the child’s account.
Kids can open a bank account at any age provided they are old enough to sign or print their name. At your appointment, bring your child’s Social Insurance Number and birth certificate to confirm their age.
Alternatives to the Big Banks
Debit transactions may not be a requirement for young children, but teens and pre-teens use their debit cards frequently.
And, since passbooks are no longer available because everything is now online, you might want to consider:
- PC Financial Interest Plus (watch for any changes when it becomes Simplii, although they assure us that the accounts will remain the same)
- Tangerine Savings Account
Neither of them has designated children’s bank accounts and you may have to sign for very young children, but both offer an interest rate of 0.90% and unlimited debit transactions. An additional plus is that your youngsters won’t have to switch to another account at a specified age.
Teach your child banking basics
Even at the higher 0.90% interest it will still take your little saver 80 years to double their money according to the rule of 72.
However, a savings account is an ideal way to teach your children the power of saving and help them create a saving plan. Try setting a percentage goal like 20% of their allowance, or set a short-term goal – price out an item they would like to buy and help them figure out how much must be saved to buy it.
Lessons on saving, budgeting, and spending; how to bank online; and how to use a debit card and ATM responsibly will go a long way toward building the skills and confidence kids need to manage their own money now and in the future.