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5 Things to Consider When Opening a Children’s Savings Account

Personal Finance

Many parents tend to prefer opening a children’s savings account for the child’s secure future. Saving money regularly for a prolonged time will help you build a big corpus for your child. This will provide them with a safe and promising future and help them cover their higher education fees and other miscellaneous bills. In addition to that, it will make your child wise regarding financial matters.

Nonetheless, there are some things that you should know before opening a children’s savings account for your kid. There are plenty of options available at different banks and non-banking financing companies, or NBFCs. In addition to different banks, there are several government schemes and programmes that provide these facilities. So, you may have the privilege of choosing from a variety of options. But it gets tricky at times.

This article will help you navigate through a children’s savings account, its benefits, and five things that you should know before jumping right into opening one for your kid. 

What exactly is a children’s savings account, and why is it opened? 

A children’s savings account helps you save money for your child’s future to cover mostly all the education-related expenses. This feature of saving money for kids was introduced by the Reserve Bank of India in early 2014.

You can open a savings account for your child who has yet to turn 18. These days, you can also apply for a savings account for children who are below 10. However, these kids’ savings accounts are to be supervised by the parents and not by the kids themselves. 

The features of a children’s savings account have similar features to those of regular savings accounts, like email services, balance inquiries, ATM cards, withdrawal limits, etc.

After the age of 18, the child no longer has access to the children’s savings account unless it is converted into a regular savings account. 

What are the benefits of opening a children’s savings account for your kid? 

There are several benefits to opening a kid’s saving account for your child, especially if there are many years left until adulthood. 

  1. Helps your child learn the basics of money:

When your child sees you saving money for a savings account, it learns the basics of money and finance. In addition to that, your child learns how to make transactions after seeing you do so. 

  1. Building the habit of saving:

Using a children’s savings account to save money and conduct transactions helps your child build the habit of saving. This is a very creative habit. It helps your child save money in the future as well. 

  1. Usage of ATM cards:

If you are a parent, you can easily get an ATM card for your child by filling out an application form. Since you, as a parent, will be handling the child’s ATM card, you are expected to make withdrawals and transactions. Your child will eventually learn how to use ATM cards as you conduct transactions.

  1. Knowing the true value of money:

When you cover all your child’s demands, he barely knows the actual value of money and what money is capable of. However, when he knows the importance of saving money, he learns the true value that money holds. 

  1. Preventing unnecessary splurging:

When your child knows the true value of money, he starts using it rather than craving expensive gifts and toys. This habit is one that every child should learn before they turn 18.

  1. Carrying out education-related expenses. 

You can easily carry out all education-related expenses using a children’s savings account. On top of that, by saving money periodically, you can also build up a huge corpus at the time of maturity. This will further help you fund your child’s higher education fees. 

  1. Realising the importance of investment:

No matter how strong your financial status is, the best way to keep it strong is by multiplying your finances. And what better way to do that than to invest regularly? Having a children’s savings account lets your child know the true importance of investment. 

Five things you should know before opening a children’s savings account

Now that you know what a kid’s savings account is opened for and what benefits it provides, it is important to know some things before opening an account. 

  1. Keeping the age bar in mind:

There are generally two categories under which banks allow you to open a children’s savings account. One category is for children who are under 10 years old, and the other is for children who are between 10 and 18.

So, when you open an account for a child below the age of 10, you have to link that account with the parents’ savings account because the child is not eligible to operate the account. However, if the child is more than 10 years old, then the child is allowed to operate the account. 

  1. Knowing about internet usage

Your child can also conduct online transactions if he is more than 10 years old. However, parents have to provide a mandate to the bank to issue a login ID and password for online transactions. 

  1. Know about the fund transfer options

Before you stumble upon opening a children’s savings account, make sure that the bank allows you to debit money from the parent’s account to the child’s account. 

  1. Be aware of spending limits:

You should also be aware of the spending limits of the kid’s savings account. Many banks have a daily spending limit of about INR 1,000 to INR 2,500. While some banks allow up to INR 5,000, others do not.

  1. Knowing about the minimum balance:

The Minimum Average Balance, or MAB, is the necessary amount that every child’s savings account must have to avoid penalties. The minimum account balance for most of the children’s savings accounts ranges from INR 2,500 to INR 5,000 for many banks. 


Having a children’s savings account for your child is a great start for a better future. It builds a large corpus. It ensures financial security. It helps your child learn the value of saving. It also makes your child more decisive regarding financial matters.

However, before opening a kid’s savings account, you should be aware of certain things. These are different rules for different age groups: the minimum average balance, the online transaction facilities, etc.

If you want to know more about children’s savings accounts and other financing schemes, you can visit Piramal Finance.