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[RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: Robert M
Date: October 07, 2015 10:58AM
Hi everyone,

My wife and I are getting ready to help Baby M master the fine art of saving money. I’ve been doing some research and it appears these accounts are the best way to go:

a. Plain ol’ savings account at local back

This will be good for simple deposits like small monetary gifts and piggy bank bucks. It can become a place to dump bucks earned for chores, allowance, etc. This will be her “official” back account as she grows up.

B. 529 account

College bucks. Bigger gifts and such can go into this account so it can grow tax-free.

Now, looking at the above, we have the 529 covered. NY State apparently has an excellent 529 plan and my wife and I may get some tax benefits to go along with it. ultra-low costs and managed by Vanguard. So, there is no question that's where we'll go for the 529 plan.

The savings bank, on the other hand, is proving problematic. If I wanted an online only account, Capital One and Ridgewood Savings Bank both offer high interest accounts online accounts. Some of the best rates and features. The Ridgewood has an edge since its interest rate is a bit higher. The problem is they are online only.

As a child, I was introduced to banking with an ol' fashioned passbook savings account. My parents brought me to the bank so I can make deposits and withdrawals and taught me the importance of saving money and managing my finances. I look forward to doing the same thing with my Baby M.

You'd think banks (local and national) would have more to offer for kids at the branch level. Higher interest rate? No. Rewards to keep kids interested in saving money? No. Lower minimum balance and no fees? Yes. Okay, TD Bank also has change counting machines that are free to use if you have a TD Bank account but that isn't just for kids. Everyone can use them. So, it seems the only major benefit is lower minimum balance and no fees. The interest rates are still awful.

Where is the incentive to open a bank account for my daughter and, when she gets older, bank locally? Argh!

Robert



Edited 1 time(s). Last edit at 10/07/2015 10:59AM by Robert M.
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Re: [RANT] Why is it so hard to find Information about a kids-oriented bank account?
Posted by: cbelt3
Date: October 07, 2015 11:03AM
Interest rates will be zero or close to it for a LONG time. Thank the Fed. Want return ? Stock market. That's a whole 'nother discussion.

Want to stay VERY local ? Talk to your local credit union... you probably have an educational credit union you can work with. They are pretty much all that is left in terms of old-timey local banks. Everybody else got swallowed up by Big Bank Inc.

I remember riding my bike to my local bank with my passbook and putting half of my lawn mowing and babysitting money into my savings account, and chuckling when they stamped the accrued interest in there. Heh heh.. money for no work ! The accrued savings eventually helped pay a bit of my college costs.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: rgG
Date: October 07, 2015 11:09AM
By the time your daughter is old enough to take to a B&M Branch Bank, and understand what is going on, there probably won't be Branch Banks any more. LOL

Since B&M banks are going by the wayside, you will have to show her how to deposit money online and it should still have the same basic effect, instilling the desire to save. Plus, that is the way she will be doing it for the rest of her life anyway.





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Re: [RANT] Why is it so hard to find Information about a kids-oriented bank account?
Posted by: Robert M
Date: October 07, 2015 11:13AM
CBelt,

Actually... I have the same problem with credit unions. No particular incentive to open a savings account for a child. Grrrrrr!

rgC,

True. Although brick and mortar branches will always be around, Baby M will likely do her banking online or via a mobile system. Still, that takes away the joy of bringing her to a bank and see how mommy and daddy banked as a kid. Danged online and mobile banking. Totally fouling up my game plan. Double-grrrrrrrr!

Robert



Edited 1 time(s). Last edit at 10/07/2015 11:13AM by Robert M.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: davemchine
Date: October 07, 2015 11:20AM
Robert, for my children I did three things:

1) I had them split their allowance between multiple piggy banks. One they could do whatever they wanted with and one was their "savings". I had read about this method in a magazine and it worked well for us.

2) Once a year I take the kids to the bank where they deposit their "savings" money into an actual savings account. It is a big event. Then every month I show them their bank statement. I reinforce the importance of this by telling the kids a story about a time when I really needed my savings account.

3) Once a year I deposit money into a 529 plan. The kids are unaware of the dollar amount. I think the state prepaid credits are a better "deal" but the 529 plan offers the most flexibility so I went with it.



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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: M A V I C
Date: October 07, 2015 11:49AM
Step 1: Teach them the difference between banks and credit unions.
Step 1b: Teach them the difference between how banks make their money (eg fee based, loan based...)

That said, our local CU offers a pretty high interest rate for kids (higher than they do for adults.) Checking or Savings, it doesn't matter.




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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: ztirffritz
Date: October 07, 2015 11:54AM
I set up a Kid's account for my son at ING (now CapitalOne360). It's all online banking though. They don't have any actual physical branches, but since there's very little overhead, they pay higher interest. Since the money is just going to sit there for another 7-12 years, that seems like a good option.

[home.capitalone360.com]



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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: Filliam H. Muffman
Date: October 07, 2015 12:30PM
Open up a Bitcoin account too, so they can learn about "bank" employees stealing money from their accounts and people trying to phish their data to steal identity.



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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: 3d
Date: October 07, 2015 12:47PM
As mentioned above, savings account interest rates are pretty much negligible. Unless she will have tens of thousands of dollars in there it's insignificant. An incentive for a little girl to save money is if she's saving for something big. Like a new bicycle of something. She's not gonna care about interest rates when they are so low. Oooooooo..... an extra $1.62!!! LOL

I scrimped and saved for years as a child going without fun toys and video games to save money because that was what I was told to do. All that savings and miserable "un-fun" years I had growing up as a kid amounted to something like two adult paychecks. Saving money is one thing, but put it in perspective for a little kid who wants to buy a new outfit for a Build-A-Bear doll.


EDIT>>>
Instead of looking at interest rates which is pretty much flat everywhere. Just open an account for her at the closest bank/credit union institution. Is there one within walking distance for her? But then again, you won't have to worry about that for 7-8 years from now.



Edited 1 time(s). Last edit at 10/07/2015 12:52PM by 3d.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: hal
Date: October 07, 2015 12:59PM
[www.google.com]

from this link, I see that BoA, Wells Fargo, Union Bank, US Bank, Cap1 and others address kids accounts - perhaps at least one of them might have incentives.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: Acer
Date: October 07, 2015 12:59PM
We did online savings accounts for the kids. We never opened a local account for them, and frankly I did not see the need. However, it is nice as an adult to have a local account of some kind in order to have a place to deposit checks that the stupid scanning ATM just won't accept, or to get access to large amounts of cash without ATM limits or a cashier's check direct from one's account. The sort of thing you don't miss until you need it.

I had a passbook until I got a real checking account, too. But that's not today's world. They need to learn how to appreciate savings on a screen.

By the way, 529 plans are awesome! Definitely do that.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: rz
Date: October 07, 2015 01:28PM
My wife set up an account at our credit union for our now 7-year-old son. When the balance hit a certain amount (I think 2.5K), she rolled it into a CD that had a 3% interest rate.

But as said above, banking is changing. It's not like the old days. Credit unions are the way to go if you don't want an online-only bank
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: TLB
Date: October 07, 2015 01:50PM
Based on your spending, see if it makes sense to set up a upromise account linked to the 529. I'm not a big fan of loyalty programs but over 18 years a little here and a little there can add up.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: Robert M
Date: October 07, 2015 01:53PM
Hi everyone,

Thanks for the suggestions. Just a heads up. I've checked and credit unions aren't any better than regular banks in regards to kids accounts. I'll find the right account soon enough. Worst case, I'll get a no-fee account at a branch for one of the banks I use currently.

One way or the other, she'll need to learn how to do banking on paper, on computer screen and on a mobile screen. Electronic banking may be the future but there is something to be said for knowing how to do things the old fashioned way. smiling smiley

Robert
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: DavidS
Date: October 07, 2015 02:23PM
Quote
TLB
Based on your spending, see if it makes sense to set up a upromise account linked to the 529. I'm not a big fan of loyalty programs but over 18 years a little here and a little there can add up.

I have a UPromise account and credit card for my 11yo. He has about $23,000 in his 529 currently. It's not much, but better than nothing. I also have a 529 for his younger sister through our State plan, so I get the tax benefit. She gets a once/year deposit.


Edit: I just checked his account. It is actually double what I thought. Woo Hoo, he may be able to afford his textbooks now.



Edited 2 time(s). Last edit at 10/07/2015 02:46PM by DavidS.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: Speedy
Date: October 07, 2015 03:03PM
Quote
DavidS
Quote
TLB
Based on your spending, see if it makes sense to set up a upromise account linked to the 529. I'm not a big fan of loyalty programs but over 18 years a little here and a little there can add up.

I have a UPromise account and credit card for my 11yo. He has about $23,000 in his 529 currently. It's not much, but better than nothing. I also have a 529 for his younger sister through our State plan, so I get the tax benefit. She gets a once/year deposit.


Edit: I just checked his account. It is actually double what I thought. Woo Hoo, he may be able to afford his textbooks now.

That's a lot of ching for an 11 year old! Good parenting!!!

It is also safer in the bank. Thieves are everywhere:

[www.viralnova.com]



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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: ztirffritz
Date: October 07, 2015 03:35PM
I have an account at a local credit union in case I need to have physical access to my money. I just transfer the funds online.



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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: TLB
Date: October 07, 2015 04:48PM
Quote
DavidS

I have a UPromise account and credit card for my 11yo. He has about $23,000 in his 529 currently. It's not much, but better than nothing. I also have a 529 for his younger sister through our State plan, so I get the tax benefit. She gets a once/year deposit.


Edit: I just checked his account. It is actually double what I thought. Woo Hoo, he may be able to afford his textbooks now.

My youngest graduated in engineering from an out of state university last year. With scholarships that easily would cover 2 years with room and board. Good job.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: Mike's Mac2
Date: October 07, 2015 07:23PM
Go to the library and get "First National Bank of Dad" - good read. I have not adopted all but it opened my eyes more than I thought. Also our credit union has a kid's savings account that is tiered with excellent interest, relatively. Bayport CU

Mike
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: The UnDoug
Date: October 07, 2015 08:35PM
Robert M, if you can get a no-fee account at a B&M bank, and then tie it to a CapitalOne360 account (their online only account), then Baby M can make deposits at the local branch, and then transfer them to the online account. You kill two birds with one stone.



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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: RAMd®d
Date: October 08, 2015 05:00AM
Years ago, in Oakland, we had Bank Day on Mondays.

We'd bring our bankbook to school, with our little deposit logged into a bankbook, put in one of those reusable envelopes that you with the little string, and watch our saving grow.

I have a lot of money in a savings account drawing something like .05% interest. No, it's not a bit surprising that there are no incentives offered to open a savings account for most kids.






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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: DavidS
Date: October 08, 2015 05:45AM
We just sold our house and recently moved. Yesterday, I transferred money from the sale into a savings account with MySavingsDirect.com (Emigrant Bank). It is earning 1.10% APY. This is the best there is currently for a non-CD or Bond account. At least it's better than the 0.01% that my bank was paying me.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: mattkime
Date: October 08, 2015 08:52AM
perhaps banks would change their tune if kids could be presented as an opportunity for overdraft fees and such



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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: rjmacs
Date: October 08, 2015 09:38AM
Quote
Robert M
True. Although brick and mortar branches will always be around, Baby M will likely do her banking online or via a mobile system. Still, that takes away the joy of bringing her to a bank and see how mommy and daddy banked as a kid. Danged online and mobile banking. Totally fouling up my game plan. Double-grrrrrrrr!

Robert

When's the last time you waited in a teller line? Now that fewer and fewer people actually go to banks in person, it can be a horrendous experience!

Quote
davemchine
1) I had them split their allowance between multiple piggy banks. One they could do whatever they wanted with and one was their "savings". I had read about this method in a magazine and it worked well for us.

Another model I think is brilliant is to split a child's allowance into thirds. One third they can spend however they like; one third they must put into savings and cannot touch except for special occasions (buying presents, special purchases, etc.); the last third is for charity, and the child decides who is the beneficiary.



rj
AKA
Vreemac, Moth of the Future




Edited 1 time(s). Last edit at 10/08/2015 09:38AM by rjmacs.
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: Robert M
Date: October 08, 2015 09:46AM
RJ,

Last week. And, the week before that. I'm at the bank regularly for both personal and business reasons. While electronic banking is becoming more and more persuasive, it has significant limitations. Case in point. Both Chase and TD Bank have specific limits to the amount of funds that can be deposited via mobile banking. My office can't deposit certain checks via mobile banking and/or our remote deposit system.

Robert
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Re: [RANT] No serious incentive(s) to open a bank account for a child at the branch level?
Posted by: rjmacs
Date: October 08, 2015 02:04PM
Quote
Robert M
RJ,

Last week. And, the week before that. I'm at the bank regularly for both personal and business reasons. While electronic banking is becoming more and more persuasive, it has significant limitations. Case in point. Both Chase and TD Bank have specific limits to the amount of funds that can be deposited via mobile banking. My office can't deposit certain checks via mobile banking and/or our remote deposit system.

Robert

What is this "check" of which you speak?

wink smiley



rj
AKA
Vreemac, Moth of the Future
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