After Chinese New Year, it is common for parents to open a bank account for their children to save lai-see, and banks usually take this opportunity to launch promotions. However, children's accounts, like any other bank account, may need to submit papers or deposits again if the documents or minimum deposit requirement is not met. They may also be charged various service and administration fees which are applied to other bank accounts. Parents should read and compare terms and conditions and charges carefully to make the right choice.
The Consumer Council collected information on children's accounts offered by 10 banks in the market. The requirements for opening an account are different among banks, and attention should also be paid to the conditions relating to the promotional offers. In general, children's accounts must be opened by the child's parents or guardians, or in their company. One of the banks requires a parent to be an existing customer before the child's account can be opened, and if the parent cancels his or her account, the child's account would also be closed.
Consumers should check whether there is any minimum requirements as deposit to open a savings account. Except 2 banks, 8 banks require a minimum deposit ranging from $10 to $5,000. If the child's account comes with a bank card or an ATM card, an annual fee or card replacement fee may be charged.
"Many a little makes a mickle", saving coins will be a good start in order to build children's savings habit, but keep in mind all 10 banks charge holder for a large amount of coin deposits, not to mention children's account. Some banks waive the charge for the first 30 to 500 coins, but once beyond the limit, they charge 2% of the total amount, or a service fee of $3 or $5 per bag (50 coins per bag), with a minimum charge of $15 or $50.
Most banks impose a minimum account balance requirement, exemptions are generally offered to children's savings accounts. 7 banks do not impose such requirement on their children's savings accounts or waive such charge for children's account holders or if the account holder is under 18. 2 banks set the minimum account balance at $5,000 but waive the charges for holders under 18. 1 bank charges a monthly service fee of $50 if the designated children accounts do not maintain a minimum balance of $5,000.
Banks charge those account holders who cancel account soon after it is opened (including children). 9 banks charge a fee ranging from $50 to $200 if the account is closed in less than 3 months. 1 bank charges $200 for closing an account that has been opened for less than 6 months.
Consumers should beware that in recent years, many banks have been offering welcome gifts or benefits, such as cartoon products or cash rebates, to attract parents to open accounts for their children. However, the conditions for receiving such gifts or benefits have to be carefully looked into. For example, 1 bank requires that within the promotion period, new accounts have to be opened with an initial deposit of $5,000 to $30,000, and the balance must maintain for at least 1 month. Parents must also provide their email address and give consent to receiving promotional messages from the bank. Another bank requires that the account balance must be maintained at a certain level within the specified period. If the requirements are not met, the bank will have the right to withdraw the gift or cash benefits received or charge $150 as handling fee.
Banks may promote various financial products to parents when they open accounts for their children, such as medical, accident or life insurance, endowment or monthly savings plans. Some of these cross-sell financial products are not actually issued by the banks; the bank acts only as an agent, selling and processing the applications. In case of disputes, consumers have to deal directly with the fund or insurance company concerning damage claims.
Generally speaking, there is a maximum age limit for children's savings accounts, ranging from 11 to 18. Therefore, consumers should consider the follow-up arrangements for such accounts. 6 of the banks allow holders of children's accounts to continue using the same account or change the concessionary terms when reaching the age limit, while the other 4 require the accounts to convert into other accounts.
Before opening a savings account for your children, pay attention to the following suggestions:
- Be sure yourself and your child clearly understand the purpose of opening an account; do not easily be attracted by the welcome gift or other benefits; and review the relevant terms and conditions carefully;
- Compare the characteristics and supporting facilities of different children's accounts, including the minimum deposit requirements, interest rate, location of bank branches, how to make withdrawals and deposits, all the charges involved; and any requirements or restrictions on age;
- Although most banks waive counter service charges for children's savings accounts, they restrict or charge deposits of coins in bulk;
- If the bank cross-sell other products or services, avoid impulse purchase on hearing words like "limited quantity", "short-term promotion" or "time-limited supply";
- Find out clearly which companies issue the financial products sold by the bank, since some banks are only agents in the sale of investment products such as fund or insurance
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