Children are the future and one of the best gifts parents can give them is a sense of financial responsibility. Leaving a legacy of a world with economically savvy adults.
And it is a duty that must start with parents. Good habits and practices around saving, need to begin in childhood.
Opening a child savings account teaches kids the importance and value of money management. They start to appreciate their little monetary gifts and to understand the basic concepts of interest rates and multiplying money early on, complimenting academic studies of addition and multiplication.
While Dubai’s lifestyle can encourage one to spend lavishly it’s never too early to learn about savings and spending sensibly. Many banks in the UAE are aware of the demand and need for this service, with a number of local and international banks offering parents an option to open child savings account.
Benefits of a Child Savings Account
• A separate account to deposit your child’s monetary gifts
• It gives your child exposure to banking
• Teaches them about money management and different banking practises such as interest rates
• It encourages them to save their money
• Helps them learn good financial practises and to be financial responsible
Different types of Child Savings Accounts in the UAE
In the UAE, banks offer a number of options for Child Savings Accounts which vary depending on multiple factors such as interest rate, minimum balance requirement, service charges and more. Parents need to choose the most suitable option depending on their financial goals.
Basic features of Child Savings Account
These saving accounts are targeted towards individuals below the age of 18 and usually have the following features:
• Very low or no minimum balance requirement. In case of non-maintenance for low balance requirement accounts, charges (vary from bank to bank) are levied on the account.
• These accounts are joint accounts and are operated by the child’s parents/guardian.
• Maximum age of child and other eligibility criteria’s to open a Child Savings Account may vary from bank to bank as well as the interest rates. However, most of banks open these accounts for children below 18 years of age with a guardian and most of them allow both UAE and non-UAE nationals to open the account.
• As per the UAE laws, anyone below 18 years of age cannot make any transactions on the account, however some banks issue debit cards for children after the age of 15. Some banks issue lifetime free debit cards, while some issue them free for only first year.
• There is no cap on deposits, however withdrawal limits are often capped by an amount or number of transactions.
• Despite the e-banking services being in full bloom, there is almost always a requirement to visit the bank. Make sure you have a branch near to home.
• The account deactivates once the child reaches the age of 18, and needs to be converted to a regular savings account.
Add-on features of Islamic Child Savings Accounts in the UAE
• These accounts are Mudaraba compliant and funds are only invested in Shariah compliant assets.
• Banks share profit and losses with you.
• Banks offer Islamic Child savings accounts in Dhirams and dollars.
Documents required to open a Child’s Savings Account
Again, each bank have their own document requirements, but apart from the application form, we have listed the common documents you need to have to open a Child’s Saving Account.
• Parent and child’s original passport
• Copy of the visa of the parent
• Emirates ID of child and parent
Banks offering Children’s account
Here is a look at a few banks that offer children’s accounts in UAE:
Abu Dhabi Commercial Bank (ADCB) Child Saver account- Is available in Dhs only. Profit is paid quarterly and debit card is issued when child is 15 years of age or more. This account offers TouchPoints Loyalty Program.
Abu Dhabi Islamic Bank (ADIB)
Banoon Children’s Savings Account- The bank offers Dharoom Prepaid Debit Card. Darhoom is a special cartoon character created by ADIB to teach children about the importance of saving in a fun way. Minimum balance requirement is Dhs 1,000. This investment account is based on the Islamic principle of Mudaraba and profit distribution (.370 per cent-.700 per cent) is on quarterly basis. Account is available in Dhs, USD and GBP.
Emirates Islamic Child’s Savings
Account- It can be opened with Dhs 100 with no minimum balance requirement and there is an option for free debit or prepaid debit cards. It also offers Life Takaful cover of up to Dhs 120,000 for the parent with the child as beneficiary (maximum of five children).
FGB Child First Savings Account
There are no monthly or annual fees on this account. This account is available only in Dhs. Minimum balance requirement is Dhs 5,000. You can avail higher interest on this account, by increasing your minimum balance amount by Dhs 2,000. Interest rate up to one per cent is paid monthly.
One small step can make your child a financially aware and secure adult.