What is a Kids Bank Account?

A Bank account is important to manage your money and finances, it includes your day-to-day spending. These accounts are most used by adults, but children can have access to them too. Opening a bank account for a child can be the beginning of a healthy relationship with money. So, see below what a kids bank account is, how it works, types of accounts, how to open and much more.

What is a kids bank account?

Kids bank accounts are common to be savings accounts, with the goal to make a reserve fund for them or hold some money for the kids needs, but they can also be offered as hybrid accounts with chequing features as well. 

They should be opened by kids’ parents or guardians, this type of account is most commonly used for those 12 years old or younger. A lot of financial institutions and banks in Canada offer this service.

With a kids bank account, it’s possible to enjoy a good number of benefits, these accounts usually are fee-free or low fees, easy to use, earning on interests, a debit card and much more.

The main reason to open a kids account is to introduce children into the financial life, this will be the first step on the money management path. Another reason is because they will learn how banking works, they can discover the main tools of banking, like how to make a transaction.

This type of account is only for a period of time, when they will be eligible for a student bank account or an adult account, when they reach the age of majority in their province or territory, they must switch. Some banks can switch it automatically or they will charge a monthly fee when the child reaches a certain age.

This special account is uniquely designed to meet the needs of children or teens.

Types of kids bank accounts

In Canada, financial institutions commonly offer two types of kids bank accounts: savings account or hybrid savings-chequing account. In some cases, the parents can choose for a joint account too. With this service, adults and children can share the access of the account, it’s a good choice to keep monitoring all activities.

To open a kids bank account, you need to look for this service in the financial institution or bank that you have chosen. However, you have to make a difference between a Registered Education Savings Plan (RESP).

A RESP is a savings account that allows the parents, grandparents, siblings or others to save money for the child’s post secondary education. These savings are only for education purposes.

How does a kids bank account work?

The kids bank account allows the account holder to have access to the common services like make transactions, deposits, withdrawals, pre-authorized payments, etc. Before applying, you should take a careful view into the main features of the account. Often, the services will be offered with no charge, but it’s important to pay attention to it, some accounts limit the number of free transactions.

Kids may not have access to a credit limit, but they can get a debit card for everyday spending. With this card, the parents or guardians can set the maximum amount they can spend. This feature is important to teach how to build a healthy relationship with their money. Credit cards can be a nightmare of overspending. 

Also, with a kids bank account, it’s possible to enjoy other benefits like no minimum deposit or monthly fees. In addition, the account holders can earn interest at a nominal rate.

Another important thing to consider is the possibility of getting access to ATM services, which will be a good opportunity for your little one to learn how to use it.

In addition, the account holders can easily access your account with the mobile app of the Bank, so they can make transactions in the comfort of their home, with more security and very quick. The parents can control the use of these apps.

Why open a kids bank account?

A kids bank account is a first step into the financial world, the children will learn a lot of things about how to use banking services and manage their money. So, we share some reasons why you should open a kids bank account for your little one. See below:

• Possibility to teach about how they should manage their money
• No monthly fees
• Access to a debit card
• Money withdrawals
• Get a savings account or a hybrid savings-chequing account
• Mobile app banking
• Earn interest

These benefits give freedom to children to manage their money, it also gives them calmness, because there are no monthly charges, the experience can be more quiet and rewarding. So, now it’s the moment to open the kids bank account.

How to open a kids bank account?

Most of the banks and financial institutions set one main requirement to open a kids account, age is very important, usually the kids should be 12 years old or younger. But, you need to take a view on the requirements of each one, for some banks teens until 17 can be eligible for it.

The documents that you should have on hand to open a kids bank account are:

• proof of address
• your child’s Social Insurance Number (SIN)
• your SIN
• your child’s photo ID or birth certificate
• your photo ID

If you want to apply in-person, you need to visit a local branch with your child, with your documents.

For online-only banks, the parent or guardian should have their own bank account to start the process, this adult needs to speak to a representative over the phone.

Financial institutions to open a kids bank account

Some financial institutions offer an easy opening process, good account features, specialized support, etc. It’s important to make a good decision when you are choosing the account that fits best with your needs. See below the best financial institutions to open a kids bank account in Canada:

• Canadian Imperial Bank of Commerce (CIBC)
• Scotiabank
• Royal Bank of Canada (RBC)
• TD Bank

Now, you have a complete understanding of what a kids bank account is, how it works, which types of accounts you can choose for, etc. So, it’s time to find an account that fits better with your needs. In Canada it’s possible to have access to a variety of good options for your children.

Also, be aware about the requirements for opening a kids bank account, mainly the age. Put in your mind, that can be a good opportunity for children to learn more about finances. With this early approach and learning, they can grow with a good mindset about how to manage their money.

For a complete guide to how to teach financial education to children, click here.

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