The 15 Best Bank Accounts for Kids in Canada
By Lucas Elliott | 07 Aug 2023 |
Teaching kids about money management and financial responsibility prepares them for a successful future. A kid’s bank account is a valuable tool for introducing children to the world of finances in a safe and controlled environment. Designed specifically for young learners, these accounts offer unique features and opportunities that make money management educational and enjoyable.
This article will explore the ins and outs of the best bank accounts for kids, understand their benefits, and what to consider when selecting one. Providing children with the right tools and resources can instill valuable financial habits and set them on a strong and secure financial future. Moreover, we will also discuss the options for acquiring credit cards for teens, considering their benefits and age restrictions, and how they can play a role in shaping financial literacy from an early age.
What is a Kids Bank Account?
A kid’s bank account is a financial product specifically designed for children so they can learn about managing money. These accounts offer more flexibility than regular savings and chequing accounts, such as special features that appeal to kids. With a kid’s bank account, the parents or guardians manage it, allowing the child to participate in day-to-day transactions with parental approval. Kids’ bank accounts are typically designed for individuals under 18-19 and automatically transition into student accounts if they decide to pursue post-secondary education.
Most kids’ bank accounts don’t require minimum balances or fees and allow easy access online or over phones. However, it’s important to note that kids’ accounts rarely offer high-interest savings accounts. The primary focus for kids’ bank accounts is on instilling financial responsibility and money management skills through practical experience and incentives while also teaching the importance of goal setting and early-life savings habits.
When searching for a kids’ bank account, it is crucial to remember that many of these accounts will eventually transition into student and adult accounts. Therefore, exploring some of the best banks for students is important during your selection process.
The 15 Best Bank Accounts for Kids
1. HSBC Youth Savings Account
The HSBC Youth Savings Account caters to youth up to 19. Afterward, you will need to open a student chequing account after. However, you can maintain the youth account until 30 if your family has the HSBC Premier Chequing Account. It’s essential to be mindful of potential high account fees once the account holder is no longer eligible for youth or student accounts.
This account offers a notable advantage with its highest interest rate of 1.85% among youth accounts. You’ll also receive a debit card and free unlimited transactions, including Interac e-Transfers.
2. Mydoh Smart Cash Card
Mydoh provides a unique tech-centric approach to teaching your children about financial literacy. RBC backs the service and combines an app with a prepaid card. The app allows parents to set up tasks and chores for their children with corresponding payments paid out on a weekly “Pay Day.” Parents can also set up an automatic weekly allowance.
When kids complete tasks or receive their allowance, the money is transferred to their Mydoh digital wallet. Although the platform offers a great way to teach your children about money management, it doesn’t earn interest on deposits. As such, Mydoh should be partnered with a high-interest savings account.
3. CIBC Smart Start Account
The CIBC Smart Start Account is a youth account for children under 13, transitioning to a student account from ages 13 to 24 until they complete their post-secondary education. Some of its advantages include free account usage until age 25, or if the account holder is still a student, it remains free.
The account offers a debit card, and students aged 14 and above can receive a free SPC+ membership, providing discounts at select retailers. Additionally, users can save up to 10 cents per litre on gas at stations participating in the Journie Rewards program. The account also includes free unlimited transactions, including Interac e-Transfers. However, like some other accounts, it does not earn interest.
4. RBC Leo’s Young Savers Account
The RBC Leo’s Young Savers Account is designed for children under 13, transitioning to a student account after. This account also provides free unlimited transactions, including Interac e-Transfers. However, the account’s interest rate is relatively low, at 0.01%.
You’ll also receive a debit card with the option to link with the Mydoh app. As mentioned above, Mydoh is a platform designed to teach kids about money management. It offers features like setting tasks for allowances, savings goals, and a reloadable prepaid card to prevent overspending.
5. Scotiabank Getting There Savings Account
The Scotiabank Getting There Savings Account is intended for children under 19. Afterward, it switches to a student account if you can prove enrollment in a post-secondary institution.
The account provides a debit card and free unlimited transactions, including Interac e-Transfers. Additionally, users can earn Scene+ rewards for using the debit card. However, like some other accounts, its interest rates are relatively low, ranging from 0.05% (for balances up to $499.99) to 0.10% (for balances above $500).
6. TD Student Chequing Account
The TD Student Chequing Account is available to youth under 23. However, you can keep this account after 23 by showing proof of enrollment in a post-secondary institution.
The account includes a debit card and offers free unlimited transactions, including Interac e-Transfers. A notable advantage is earning 50% more Starbucks star rewards when the debit card is linked to a Starbucks account. However, the account’s interest rate is relatively low at 0.01%.
7. BMO Performance Chequing Account
The BMO Performance Chequing Account is accessible to individuals under 13 and transitions to a student account when they reach 19, if in post-secondary education. The account offers free unlimited Interac e-Transfers and transactions and provides a debit card. However, the account does not earn any interest.
8. Desjardins Everyday Account for Youth
The Desjardins Everyday Account for Youth is targeted at children under 18. However, the account will remain free if the owner meets varying eligibility requirements. This can include individuals aged 18 to 21, students aged 22 to 25, or any full-time student at a Canadian university. The account offers a debit card and free unlimited transactions, including Interac e-Transfers.
However, one limitation is that its branches are primarily located in Quebec. This can provide difficulties with opening a Youth account in other provinces. Furthermore, using a non-Desjardins ATM incurs a $1.5 charge within Canada. As such, this account is not ideal for those outside of Quebec.
9. National Bank Youth Account
The National Bank Youth Account is targeted at youth ages 14 to 24. It offers a debit card and free unlimited Interac e-Transfers. Users can access over 3,000 ATMs across Canada through THE EXCHANGE Network. However, this account does not earn any interest and is limited to 30 monthly transactions, including in-branch transactions.
10. Tangerine Children’s Savings Account
The Tangerine Children’s Savings Account caters to youth up to 12, then transitioning to a student account. You need to be 16 years old to open a chequing account. It offers a high-interest rate of 1.10% and unlimited transactions. However, it does not provide a debit card.
To open this account, a parent or guardian must have an account with Tangerine first. It’s important to note that all banking with Tangerine is conducted online, and the account can only receive e-transfers but cannot send them. Only after 16 can you open a debit account and send e-transfers.
11. Canadian Western Bank Youth Account
The Canadian Western Bank Youth Account is designed for children under the age of 19 and transitions to a student account when they turn 19, lasting until they complete their post-secondary education. This account provides several advantages, including free unlimited transactions, Interac e-Transfers, a debit card, and the opportunity to earn interest ranging from 0.05% (for balances up to $500) to 0.50% (for balances above $500.01).
Users can access over 3,000 ATMs across Canada through THE EXCHANGE Network. However, one limitation is that its branches are primarily located in western Canada, with a limited presence in Ontario and no branches further east. As such, there may be difficulties with opening a youth account in eastern Canada. Furthermore, using non-Canadian Western ATMs incurs a $1.50 charge.
12. ATB Generation Account
The ATB Generation Account is designed for youth under 20. For those under 12, a joint account holder, usually a parent or guardian, is necessary. This account comes with a debit card and offers unlimited transactions at no cost, except for a $1.50 fee for requesting e-transfers. However, receiving funds is complimentary. You’ll also receive a modest interest rate of 0.10% on all balances.
It’s important to note that ATB can only legally open bank accounts for Alberta residents. Furthermore, you’ll only receive two free monthly ABM withdrawals outside the province. Afterward, you’ll need to pay $4.50 per withdrawal.
13. Meridian Credit Union Youth Savings Account
The Youth Savings Account from Meridian Credit Union is tailored for children under 18. With Meridian, users benefit from over 43,000 surcharge-free ATMs throughout North America, ensuring easy and secure fund access. This account includes a debit card and unlimited free transactions, though there’s a $1.50 fee for sending e-transfers. Receiving money, on the other hand, is free.
One limitation is that Meridian’s branches are exclusively in Ontario. However, their subsidiary Motusbank offers banking services to all Canadians except Quebec residents. The interest rate stands at a modest 0.05%.
14. Servus Credit Union Youth Plan
The Servus Credit Union Youth Plan is a prime choice for those under 17 desiring a fee-free daily banking solution. Individuals aged 12 and above can autonomously manage the account, but those below 12 need a parent’s signature to obtain a debit card. However, branches are only in Alberta, implying you must be a provincial resident to open an account.
This account provides 60 complimentary electronic or in-branch transactions monthly and unlimited Interac e-Transfers. However, a $1.25 fee applies for transactions beyond this limit. The plan also includes one free non-credit union ATM monthly withdrawal within Canada. The interest rate is set at a modest 0.10%.
15. Vancity Chequing Plus Account
The Vancity Chequing Plus Account is tailored for young individuals under 25. It offers unlimited transactions at no charge. However, Interac e-transfers are a different story. While you can receive e-transfers for free, there is a $0.90 fee to send and request.
To open this account, one must reside in BC and deposit $5 upon account opening as a membership share. Account holders can access over 4,000 ATMs nationwide via THE EXCHANGE and ACCULINK® Networks. Using ATMs outside these networks incurs a $2.00 fee per transaction. This account doesn’t accrue interest.
The Two Steps to Opening a Kids Bank Account
Now that you understand Canada’s best kids’ bank accounts, the next step is to open a bank account for them. This will provide them with valuable financial education and can assist them with establishing healthy savings habits. There are two necessary steps to make this happen; understanding how to compare accounts and opening one. This section will walk you through both steps.
a) Factors To Compare Kids Bank Accounts
| Term | Description |
|---|---|
| Savings Interest Rates | The interest rates provided on savings accounts determine the amount of money earned on deposited funds over a specific period. |
| Low Account Fees | Refers to minimal charges or costs associated with maintaining and managing a bank account, such as monthly maintenance fees or transaction fees. |
| ATM Access | The ability to withdraw cash or perform other banking transactions using automated teller machines (ATMs) conveniently located within a bank’s network or affiliated networks. |
| Free Debit Card | A payment card linked to a chequing account allows customers to make purchases or withdraw cash directly from their accounts without incurring any additional charges for the card itself. |
| Banking Budgeting Tools | Tools or features offered by banks that assist customers in managing their finances effectively, including budget trackers, spending analysis, and personalized financial planning assistance. |
| Parental Controls and Oversight | Features provided by banks to give parents or guardians the ability to monitor and control their child’s banking activities, ensuring responsible financial behaviour and protecting against unauthorized spending. |
| Age Restrictions and Eligibility | Refers to the minimum age requirement and other eligibility criteria set by banks to determine who can open an account or access certain financial services, often based on legal and regulatory guidelines. |
| Additional Benefits | Extra advantages or perks banks offer their customers, such as rewards programs, discounts on certain purchases, or access to exclusive financial products or services. |
b) The Process of Opening a Kids Bank Account
After deciding on the financial institution, the next step is opening the account. Although every financial institution is different, they generally follow the same process. Depending on your child’s age, you must visit a branch. However, some institutions let you manage the process online. In general, you’ll need to follow these two steps;
I. Gather Documentation: To open an account, you may need documents like a birth certificate or Social Insurance Number (SIN). Depending on the institution and the type of account you choose, you may also need a driver’s license, passport or even proof of residence.
II. Visit Your Chosen Financial Institution: Once your documentation is ready, visit your chosen financial institution with a parent/guardian, along with the necessary paperwork to open an account for your child. Most institutions require in-person signatures to open up a kid’s bank account.
Credit Cards For Teens
It’s also worthwhile to consider opening a credit card for your child while going through the banking process. This builds a credit score at a young age which can help them reduce their interest rate on student loans, car loans, and even mortgages. Aside from this, it offers access to emergency cash while they are travelling or away from home.
Although your child needs to be at least 18-19 to receive their own card, there are some workarounds. This section will explain different options for receiving one of the best credit cards for teenagers.
a) Authorized Users
The best option is adding your teen to your existing credit card account as an authorized user. This allows them to use the card while likely benefiting from the credit history associated with the account. However, you must confirm that the credit card company reports authorized users to the credit bureaus. The authorized user will not build their credit score without reporting.
As the primary cardholder, you can monitor their spending and guide responsible credit card usage. However, setting clear expectations and establishing rules is crucial to avoid potential misuse and financial pitfalls.
b) Prepaid Credit Cards
Another option is to provide your teen with a prepaid credit card. Prepaid cards load a specific amount of money onto the card, which can be used for purchases. This option offers a controlled spending limit, allowing your teen to learn how to manage money within defined boundaries.
Additionally, prepaid cards do not involve credit checks or risk accumulating debt, making them a safer option for building financial responsibility. However, reviewing any associated fees and terms is important, such as reloading costs and expiration dates. Prepaid cards also generally do not build any credit history.
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c) Joint Credit Cards
The third option is to apply for a joint credit card with your teen. This will allow them to get their own credit card while still being held accountable and supervised by you as the main cardholder. Joint credit cards also allow both parties to build their individual credit profiles – important for future loan applications and other financial opportunities. It will have a predetermined spending limit, and you (the parent) can monitor your teen’s spending and help them learn how to use it responsibly. However, one must be either 18 or 19 to be eligible for a joint credit card.
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Best Bank Accounts for Kids: The Bottom Line
When considering the best bank accounts for kids, it’s essential to prioritize financial education and cultivate responsible money management habits. These specialized accounts offer valuable opportunities for children to learn about budgeting, saving, and the basics of banking.
As these accounts eventually evolve into student/adult accounts, it is essential to adopt a forward-thinking approach by comparing chequing accounts and comparing savings accounts at various banks where you intend to open a kids’ account. Moreover, several banks in Canada offer enticing high-interest savings accounts, which should also be taken into consideration down the road. By instilling financial literacy early and leveraging appropriate resources, we can empower our children to construct a robust and secure financial framework for their future.
FAQs About Best Bank Account For Kids
Yes, TD Bank has kids’ bank accounts. Kids can sign up for the TD Student Chequing Account and keep the account free of charge till the age of 23. The accounts offer low fees, free debit cards, budgeting tools and more.
HSBC currently offers the best Children’s account in Canada. The HSBC Youth Savings Account offers the highest Youth savings interest rate at 1.85%, higher than any other bank in Canada for the type of account. It also has low fees, a free debit card and unlimited transactions, including Interac e-Transfers. However, It lacks benefits like CIBC’s free SPC card or TD’s Starbucks reward program.
Many banks in Canada offer children’s accounts, including BMO, Canadian Western Bank, CIBC, Desjardins, HSBC, Laurentian Bank, National Bank, RBC, Scotiabank, TD and Tangerine. Each bank offers different features and services for their kid’s accounts. Before opening a kid’s account, it is important to compare all the features available from each provider to pick the best one according to your child’s needs.
To open a children’s savings account in Canada, you will typically need the child’s birth certificate or other proof of identification, along with your own ID. Additional documents may be required, such as proof of address, depending on the financial institution and type of account opened. You may also need to provide information about the child’s parents or guardians for contact purposes. Be sure to check with your bank before opening an account for a child.
A credit card for kids provides three distinct options to choose from. The first option is prepaid credit cards, where funds are preloaded onto the card, such as the Mydoh Smart Cash Card. Another option is to sign your child as an authorized user on your existing credit card. The third option involves applying for a joint credit card, allowing parents and kids to manage finances together.
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