What are the various types of savings account you can consider for children?
Your child is your most valuable possession. You take care of your child by all means. But are you concerned enough about your child’s financial future? It is only you who can help your child realize about the importance of savings. Encourage him to save his coins into his small piggybank and prepare yourself to learn about different savings accounts for children. A secured and stable financial future would be the best gift for your child, especially in this economic scenario. Following are some of the savings accounts through to save your children whenever they will be in a financial crisis.
Regular savings accounts
These are very simple and ‘easy-to-maintain’ accounts which allow parents to save for their children so that they can cope with any type of financial issues in future. Parents are free to deposit some funds into these regular savings accounts for children according to their comfort. There is no such obligation that they will have to do so within a specific time frame. Parents set up the accounts in the name of the children and hand it over to them when they wish to do so. They can also extract money from the accounts if they need. However, regular savings accounts offer very poor interest rates for their customers.
Children’s Bonus Bond
A long-term investment option, named as children’s bonus bond, is available for those who can afford a large amount at a time. Unlike other savings accounts for children, this plan offers a bonus amount after a span of five years. This extra money is added to the total interest, which has been accumulated over that time and you do not need to pay tax for any of these two. The fund can be withdrawn at any time as a whole but if you do it within one year, you will not be counted for the interest. When your children reach sixteen, they can access the account.
Fixed Term Savings Accounts
Fixed term savings accounts are another type of saving accounts for children in which a certain amount is fixed for a certain period of time. It can be from one year to five years. Parents are not at all bound for the amount of money they are going to invest. They are also free to choose the time line for which they want to save their money. The rates of interest are also very high as it these are fixed savings. But there is a major drawback of this plan. It is never possible to withdraw the money before the tenure ends.