Open a saving account for a minor

POSTED BY Deepak Chaudhary ON August 23, 2013 10:46 am COMMENTS (6)

I have a 2 year old baby girl and want to do some saving for her.

Currently I am saving through FD and putting aside some money in my account. But since it is same account it is hard to manage.

So I want to open a separate account for her.

My doubt is do banks have different type of account for minors. If they do have are there some different facilities or features which they offer.

My preference is for the account which I can operate online with ease and free of charge.

For example

1. I have Citibank with which I can do everything online or through phone without going to bank.

2. For SBI I went to bank to get the account username and password. They have per day limit on transaction amount. Also they charge if I transfer the money to some other bank account.

3. With IDBI I need to go to bank for any account details update. They also have per day limit on money transfer. But money transfer is free of cost and adding a beneficiary is also easy.

4. My wife has a Vijaya bank account. There it is even worse. Go to bank for everything. Write an application for everything. If you need to add a beneficiary you can do it online but they will send a SMS to you registered mobile you need to send that message to a number(SMS charges applied). Tried it 2-3 times but the beneficiary was not added.

So I need an account which I can operate hassle free and free of cost.

Also if I can get higher interest on saving, that will be a bonus.

6 replies on this article “Open a saving account for a minor”

  1. Dear Deepak, there are 2 ways to do this thing.

    1. Learn on your own & implement your learning in to your life for your financial planning

    2. Take professional help from a fee only planner & enjoy your life

    Opt the 1 you are comfortable with.

    Thanks

    Ashal

  2. deepak says:

    Hi Ashal,

    Thanks for clarifying the doubt. I am not good at financial planning. So what is your suggestion.
    How should i start.

    Thanks,
    Deepak

  3. Dear Deepak, you can open a designated bank account in SBI or ICICI or any other bank of your choice. You can save money in it & even create FD also. But the problem lies with the taxation. in a FY, only 1500 Rs. income (generated from investments) under a child’s name is tax free. Any income above this 1500 Rs. is to be added in the income of the parent who is in higher tax slab.

    That’s why I asked the end object.

    if the idea is to save for the future & you also mention financial planning as next step, my dear friend, child related financial things, your own retirement, home, health & life insurance, estate, taxation all are integral part of your financial planning. You can not start in bits & pieces here & there.

    So, focus on the end thing – you want to save for you child. Good. Invest separately under your own name.

    thanks

    Ashal

  4. deepak says:

    Hi Ashal & BanyanFA,

    The end goal is to save for my child. As I said I already have some amount saved which i don’t want to touch and then add to the saving.
    As starting point i want to reserve money separately so that i have clear idea how much is there, how much i need more and then invest in future.
    Next step is financial planning. For which I will again need help.

    Thanks,
    Deepak

  5. BanyanFA says:

    Deepak,
    As Ashal mentioned, perhaps you need to take a step back and think more strategically. What is your objective ? If you want to invest for your daughter’s future, a bank account is not a limitation. You need to arrive at a financial plan which meets your goal. Then any bank account will be okay as they are just infrastructure to support your payments.

  6. Dear Deepak, do you want to save for you child or want to have saving bank account for your child? Please read my question carefully before answering the same.

    Thanks

    Ashal

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