Banks Dropping The Ball On Children’s Banking Options
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 |
| BMO | Plus account* | >13 | — | 30 | — |
| 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.
I totally agree. I think that this is most likely due to the fact that it appears by latest bank earnings that the focus of most is now wealth management, not personal savings of any variety. I know as a retail customer I have felt this for the last 10-15 years. As you noted a large percentage of people stay with childhood banks all of their lives. I suspect with the last couple generations growing up tech savvy and less loyal, it will costs banks on both retail and wealth management in the next few years as our youth matures into the customers the banks realize they want.
Hi Murray. I totally agree with you that the big banks have been focusing on wealth management for a while now. That leaves the door wide open to alternative financial enterprises that will leave the banks scrambling in the future. Think of past-dominant IBM thinking that “regular” people would have no interest in personal computers and losing out big time to upstart Microsoft.
Yes! Not many banks offer ways for kids to save and learn about money. I love the idea of starting a small online savings account for the kiddos that they can learn to manage. Although I do think there’s value in showing kids how to physically go into a bank to manage their money, too.
I used to think so too. My kids loved going into the bank to get their passbooks updated – and they even got a meaningful interest amount. Now, I’m not sure of the value.
I think you mean
I think you mean less than for the ages in the chart. Not greater than
Hi Shandel. Actually I meant “up to.”