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My First Bank Account: Safely Starting Your Child's Savings

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One of the most important tasks a parent has is instilling good habits in their children that will help them throughout life. Understanding how money works and learning to save are among the critical life skills that are needed.

Thankfully, parents are increasingly getting help preparing their children for their fiscal future through Child Savings Account (CSA) programs. CSA programs nearly tripled during the past few years – growing from 42 programs with 313,000 children enrolled in 2016 to 124 programs in 2020 with more than 965,000 kids participating.

Importance of Child Savings Accounts

The potential long-term benefits of opening a Child Savings Account are well documented. Families with a CSA save 400% more in 7 years than families that do not enroll in one. One survey found that more than half of those surveyed (53%) hadn’t opened any kind of savings account for their children — which means more than half are missing an opportunity.

Opening a CSA for your child and sharing the experience of managing it with them can help give them a great start that stays with them throughout life. But being safe, smart and secure about opening that account is key.

Choosing a Child Savings Account

A lot of banks and credit unions participate in CSA programs, but the variety can be confusing to some. In most cases, parents can co-own the account, allowing them to help steer their children’s financial experience. There are also custodial accounts, which enable parents to save for their children without giving them access to those funds until they are adults.

One place to start could be your child’s school. Most states have some kind of youth financial education program that includes a savings account. Your child’s school might already partner with a bank or credit union in your area to ensure students start saving early.

When selecting a Child Savings Account, there are a few factors that you ought to consider to find the one that’s right for your situation. To show your child faster growth — which can be the best way to get them excited about saving money — look for accounts that offer a higher interest rate with lower fees and minimum balance requirements. Be clear about when and how you want your child to be able to access the funds.

There are several websites designed to help parents evaluate different kinds of savings initiatives for children, including CSAs, which you can use as a starting point.

Items Needed to Open Child Savings Accounts

There are a few basic items and pieces of information you will need to open your child’s first bank account.

  • Your child’s full name, birthdate and Social Security number (SSN)
  • Your picture I.D. (like a driver’s license or a passport)
  • Your SSN
  • Personal information like your physical address, email address and phone number
  • An initial deposit (cash or check) as required by the bank


How to Protect Your Child and Their New Account

Javelin Strategy & Research’s 2021 Child Identity Fraud study revealed that 1 in 50 U.S. children (more than 1.25 million kids) were victims of identity theft in 2020. Also, identity theft costs families close to $1 billion annually. Every month, fraudulent bank account charges are among the top reported types of financial identity theft to the Identity Theft Resource Center (ITRC).

Many things can be done to protect children when you open their new account, starting with teaching them to protect their identity and money.

  • Protect their login credentials. Right now, usernames and passwords are some of the most valuable information to identity thieves. Make sure your children have unique 12+ character passphrases for each account. They are easier to remember and harder for a hacker to guess. It also reduces the likelihood of credential stuffing (where criminals hack multiple accounts because you have the same login and password for other accounts).
  • Do not share information with friends or strangers. The fewer people that have access to one’s personal information, the less likely it is to be stolen.
  • Do not carry a debit card unless it is needed. Again, this simple step reduces the likelihood of a debit card accidentally ending up in the wrong hands. People cannot steal what they don’t have.
  • Be safe while shopping online and making in-game purchases. You should ensure your kid is not sharing their debit card information and that debit card information is not being stored for payment.
  • Consider parental controls. Some accounts have parental controls, while others do not. If an account does, review what information you have control over and the protections in place for your access to those controls.

Taking all the preventative steps to reduce the risk of child ID theft does not mean an identity crime cannot happen. There are warning signs that your child’s identity may have been stolen or that their account could be compromised.

  • Money is taken out of your child’s account that they did not debit or charge. (Sometimes, this can be tricky because not all children will be honest if there is a charge a parent does not recognize.)
  • Pre-approved credit card offers in your child’s name.
  • Denial notices for your child from a bank or credit card company.
  • Calls from collection agencies regarding bills or credit cards in your child’s name.
  • An Internal Revenue Service (IRS) notice that your child’s name or SSN is listed on another tax return(if the person claiming your child is not a parent or legal guardian).
  • Your child’s personal documents (SSN, birth certificate, etc.) are stolen or missing.
  • A delinquent tax notice from the IRS to your child.
  • Denial of government assistance or medical insurance for your child because income or benefits have already been assigned to the child’s SSN.
  • A traffic violation or taxes-owed warrant notice in your child’s name.
  • Request to verify employment for a job where the child has never worked.

Teaching your child strong financial and security habits early can help instill the skills they need throughout their lives. A CSA program could be a good way for you to get started.

Sontiq, a TransUnion company, is a proud supporter of the Identity Theft Resource Center nonprofit.

What You Need to Know:

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