Wednesday, October 13, 2010

Savings Accounts for Kids: A Ranking of the Big 5 Banks

Before I suggest where you might open an account for your kids, take a look at what the Big 5 banks offer:

#1 CIBC Advantage for Youth
0.50% interest
Almost no transaction fees

#2 TD Bank Youth Account
0.05% interest / 0.25% on balances $5,000+
Almost no transaction fees 

#3 Bank of Nova Scotia Getting There Savings Program for Youth
0.05% interest  / 0.10% on balances $500+
Some transaction fees

#4 RBC Leo's Young Savers Account
0.01% interest rate
Some transaction fees 

#5 Bank of Montreal - does not have an account for kids

Interest rates that don't crack a full percent and no bonus for signing up? I'm surprised at how little interest (no pun intended) the Big 5 banks have in courting the next generation of consumers. So are there any banks in Canada that do want to have our kids as future borrowers and investors? Yes. There's one, that I know of, and that's INGDirect.

2.0% interest
$25 bonus when you sign up with a $100 balance
No transaction fees

That 2% interest rate is not a typo, nor is the bonus. "How can that be?" you might ask.

I had the opportunity of interviewing Meena Sandhu, the Regional Retail Manager at the downtown Vancouver ING Cafe, about their stand-out children's savings account. Essentially, she informed me by phone, this account is driven by two areas of the company: marketing, of course, but also their philanthropy mandate.

This savings program for kids helps ING meet its mission statement of improving financial literacy through education and tools. "ING," said Sandhu, "is a very hands on bank." She went on to add that it's important for Canada's economic future that we "empower through knowledge." The ING children's account,  hand-in-hand with their online financial literacy website for young children called Planet Orange, helps the bank meet their philanthropic goals.

Philanthropy aside, I love the bottom line in this story. My daughter will earn 2% interest plus be rewarded with that $25 bonus for opening her first bank account. Correction, she has earned and has already been rewarded. Thank you ING, see you later Big 5.

Copyright 2010. Laura Thomas. All Rights Reserved.
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