What to look for in a kids’ bank account

When your child is ready to graduate from piggy bank to real bank, you’ll want to look for an account that doesn’t eat into those initial deposits of loonies, toonies and birthday money with a bunch of bewildering fees. There are many options for your young saver that allow them to watch their money grow, without charging an arm and a leg for each withdrawal, deposit and e-transfer.

“Many of the banks in this country have accounts for your kid’s first savings account—and they’ll have great features such as no monthly fees, and unlimited free transactions,” says Melissa Leong, author of the award-winning finance guide Happy Go Money and a mother of two. This is important because you don’t want your child’s first money lessons to include a lecture about minimizing unnecessary charges, Leong says.

Although our children will definitely bank digitally and go cashless more than previous generations, she believes there is still great value in taking your kids into an actual bank. The tactile experience of handing over money and seeing a new, higher total on their statement “helps them appreciate that money should be earned and saved.”

“I have the fondest memories of going to the bank with my deposits,” Leong recalls. “I’d see the value of my account rising and I felt extremely proud. I also appreciated being treated like I was someone important. The account was in my name. The bank associate addressed his questions to me. It reinforced the idea that I was doing something worthwhile.”

Unfortunately, the no-fee structure of children’s bank accounts comes with a tradeoff: lower interest rates than those of a high interest savings account, explains Leong. “You’ll have to turn to one of Canada’s online banks for a higher rate among youth savings accounts,” she says.

If you decide to go with an online bank, Leong recommends trying to make the process as tangible as possible by printing out monthly statements and discussing your kid’s progress. “Talk about what she could be saving for and perhaps how long it might take to reach that goal,” suggests Leong.

Here’s a breakdown of some of the top kids’ bank accounts available in Canada and what they have to offer.

The best kids bank accounts in Canada

• RBC Leo’s Young Savers Account
• Scotiabank Getting There Savings Program for Youth
• TD Youth Account
• CIBC Advantage for Youth Account
• Tangerine Children’s Savings Account
  

RBC Leo’s Young Savers Account

This account’s stand-out feature is a $25 sign-up bonus that gives your little one’s savings a boost. Interac e-Transfers are free but debit transactions are capped at 15 per month. RBC says this account is ideal for kids 13 and under. Teens may prefer to switch to a student account with more free transactions.

• No monthly fee
• Up to 15 free debit transactions
• $25 starting bonus if you apply before December 31, 2020
• 0.01% interest
• No minimum balance

Scotiabank Getting There Savings Program for Youth

This kids’ bank account offers a nice bonus for little movie buffs, who can earn Scene Points with every purchase using their debit card. Alternatively they can choose to put the bank’s Scotia Rewards toward things like gift cards or tech gadgets.

• No monthly fee
• Unlimited debit transactions
• 2 free Interac e-Transfers per month
• 0.05% interest on deposits up to $499; 0.10% interest on deposits of $500 or more
• Earn Scene Points (I Point per every $5 in purchases on your debit card; 1 Point per dollar at Cineplex locations) or Scotia Rewards (one Point per $5 spent using debit)
• No minimum balance

TD Youth Account

Parents can set up a recurring preauthorized transfer from their own account to their child’s, which means allowance can go digital. Regular monthly transactions, such as withdrawals, cheques and purchases using your TD Access Card, are unlimited but Interac e-Transfers cost $0.50 each.

• No monthly fee
• Unlimited transactions
• 0.01% interest on deposits
• Interac e-Transfer $0.50 each up to $100; $1.00 each after that
• Preauthorized transfer or set up a designated amount to go into your child’s account using TD’s automated Simply Save deposits when you use your access card
• No minimum balance

CIBC Advantage for Youth Account

CIBC positions its children’s account as a savings account with some of the conveniences of a chequing account. As your child grows and gets more money savvy, they can access a prepaid Visa card as well as online and mobile banking. When your child turns 19, this account will automatically convert to a Premium Growth Account, which also has no monthly fee. However, that account does have a fee of $1.50 per transaction, meaning your newly-minted adult may wish to open a chequing account for everyday purchases at that point and use this account for savings.

• No monthly fees
• Unlimited transactions
• 0.15% interest
• No limit on Interac e-Transfers
• No minimum balance

Tangerine Children’s Savings Account

At 1.2%, this branchless bank’s offering had by far the highest interest rate we found in an account for kids. The catch is that a parent has to bank with Tangerine in order for their child to open the account. If you’re already a Tangerine customer, this may be a no-brainer, but you’ll have to weigh carefully the costs of managing an additional new Tangerine account for yourself against the benefits of extra interest for your child.

• No monthly fees
• Unlimited transactions
• 0.30% interest
• No minimum balance