Benefits of Opening a Bank Account for Minors in India

It is important to encourage children to save so that they understand the value of money and saving for their future. As a legal guardian or parent, you should ensure to keep your child’s future safe in all aspects. By opening a savings account for a minor, you can get them started on the perfect financial journey. With this account, you don’t have to wait for them to turn 18 before they start doing financial transactions as this account will let them save or invest their pocket money under your supervision.

Benefits of opening savings account for minors –

• It teaches them young the value of money and saving
• It teaches them the basics of financial management
• It teaches them how to prioritize financial matters and take decisions early in life
• It teaches them basic math skills and learns how compounding interest works
• It teaches them how to save, what to afford and when to buy

Things you should consider before opening savings account for minors

Age: Banks in India allow you to open minor savings accounts for children below the age of 18. Before opening this account, you should consider the age of your child as you will be the legal guardian or a joint account holder of the account. Starting early will teach your child how to save and invest and look or plan for long-term goals. Once your child is 18, you will legally have to turn the minor account into a regular bank account.

Transfer of funds: When you plan to open a bank account for minors, you can check with your bank if you can jointly, with your child, transfer funds using NEFT or RTGS.

Spending Limits: Since this account is for minors, it comes with a maximum daily spending limit to ensure your child doesn’t go overboard in using the parked funds in the account. Banks such as IndusInd Bank, issue debit cards at the time of account opening. Banks may also cap the number of debits you can make (or your child) in a financial year.

Maintenance of minimum balance: Just like a regular savings account, as per the bank’s discretion, there may be minimum balance maintenance applied to the account. Furthermore, as per the city you are in, and the bank you have an account with, maintaining an average of INR 5,000 in a minor savings account is the norm. Check with your bank about the minimum amount required to avoid any charges.

Documentation

To open a minor savings account, you need the following documentation –

• Aadhaar card of the minor
• Birth certificate of the minor
• Applicant’s recent passport-sized photograph
• Proof of relationship between the minor and the legal guardian
• Address proof

Having a savings account for minors can open a world of opportunities for your child. It is an excellent way to teach your child how to save money and even teach them young how to invest in mutual funds or SIPs. By the time they are 18, they will graduate high school with complete financial knowledge ahead of their peers.

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