Whether they’re your first or your fifth, there’s no doubt you want the best for your new grandchild. And while you may think of offering their parents free babysitting or prepared meals as a way to welcome a new grandchild into the world, there’s another helpful option you may wish to consider – opening the child’s first financial account.
Why Should I Open a Financial Account for My Grandchild?
When children are young, parents may receive monetary gifts on their behalf when they’re born or experience a significant milestone, like a baptism. As they grow, the children may receive cash gifts directly in a holiday or birthday card. Having their own bank account gives them a safe space to set this money aside and possibly earn some interest on it, too.
No matter their age, having their own bank account also helps children learn important money management skills. When they’re younger, if you open a PSECU account for the child, you can use our various share options to introduce the save, spend, share concept. This concept helps teach them how they can use the money they receive by putting it toward a savings goal, spending it on something they want, or using it to help others. By setting up different shares like checking, savings, or Money Market, they can have a visual representation of how their money is divided between these uses.
As your grandchild grows, so do the ways they can use their account. When they’re older, they may use a debit card to make small purchases on outings with friends, or as a teen, they may need to set up direct deposit for their first job.
When Should I Open a Financial Account for My Grandchild?
It’s never too early to start building a solid financial foundation for a child. Once your grandchild has a Social Security number, an account can be opened for them with us as long as they qualify for PSECU membership. If you’re already a member, your grandchild is automatically eligible to join.
If your grandchild’s a bit older already, it’s not too late to open, or help them open, their own account, as well.
What Account Options are Available for Youth at PSECU?
The types of accounts available for your grandchild depend on their age.
For youth under age 13, you can open an account on their behalf. This is called a custodial account. The custodian isn’t required to be a PSECU member, but the child must be eligible for membership.
Custodial account benefits include:
- Special youth savings rate: Children under age 18 qualify for a 1.00% Annual Percentage Yield (APY) earned on as little as $5, up to $500. Balances above the first $500 will accrue interest at the current Regular share rate.
- Low fees: There are no account opening or monthly maintenance fees for a custodial account.
- Adult control: The account custodian (family member or guardian) can make deposits,
withdrawals, write checks, and access the account through digital banking.
A custodial account can remain open for a child until they turn 21, and until that time, only the custodian can make account withdrawals.
For youth 13 and over, you can either open a custodial account or a general membership account. An adult can be a joint account owner on a general membership account, allowing you to monitor and provide guidance for your grandchild’s money management journey. A joint owner isn’t required and doesn’t need to be a PSECU member, but the teen must be eligible for membership.
General membership account benefits include:
- Special youth savings rate: Children under age 18 qualify for a 1.00% Annual Percentage Yield (APY) earned on as little as $5, up to $500. Balances above the first $500 will accrue interest at the current Regular share rate.
- Low fees: There are no account opening or monthly maintenance fees for a custodial account.
- Digital access: Your grandchild can monitor their account, make deposits, or transfer funds through digital banking.
Get Your Grandchild Started on the Right Financial Foot Today
Grandparents play an important role in the lives of their grandchildren. Make your involvement count even more by introducing them to important money management skills from the beginning. Get started by opening an account for them today.