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Compare savings accounts for children

Help your children gain financial literacy and earn interest on their savings with a youth savings account.

You can set your child up for financial success in the future by helping them to open a youth savings account. Youth accounts come with special features that help young people save money and learn how to use a bank account. Find out more about how savings accounts for kids work and compare options to find the best fit for your child.

How do youth savings accounts work?

Youth accounts are available from all of Canada’s major banks and a handful of alternative providers. These accounts are designed to help your child save money and learn how to use a bank account. Many offer unlimited free transactions, no monthly fees and compounding interest, so your child can enjoy all the benefits of a savings account without the extra costs.

Most youth accounts can be opened at any age, though your signature may be required as part of the deal. Once your child reaches the maximum age for their account, they’ll typically be switched over to a default adult account with monthly fees. You should make sure you know which type of account this is and how much your child will have to pay when they switch.

Why should my child start saving early?

Saving money early lets children earn compounding interest and build up their lifelong savings – which can help them purchase their first home, pay for their postsecondary education or have a nest egg put away for retirement. It also teaches them the value of putting money away so that they’re better prepared to achieve financial independence in the future.

Compare youth savings accounts from Canada’s Big Five banks

Youth accountMinimum ageMaximum ageMonthly feeMinimum deposit or balanceTransaction feesInterest rateWhat to watch out for
CIBC Advantage for YouthNo minimum age18$0$0free and unlimited0.05%N/A
RBC Leo’s Young Savers AccountNo minimum age12$0$015 free debits per monthNo interestTransactions cost $1.25 when you surpass 15 transactions
TD Youth AccountNo minimum age18$0$0free and unlimited0.01%e-Transfers are $0.50 each
BMO Youth AccountNo minimum age18$0$025 free transactions per monthNo interestTransactions will cost you $1.25 when you surpass 25 transactions
Scotiabank Youth Savings AccountNo minimum age18$0$0Unlimited transactions0.05%Only 2 free Interac e-Transfers (and $1 after)

Compare youth savings accounts from other financial institutions

Youth accountMinimum ageMaximum ageMonthly feeMinimum deposit or balanceTransaction feesInterest rateWhat to watch out for
Tangerine Children’s Savings AccountNo minimum ageAge of majority in province of residence$0$0free and unlimited0.2%Online-only
Canadian Western Bank Youth AccountNo minimum age18$0$0Unlimited transactions0.05% (or 0.5% over $500)Interac e-Transfers cost $1. Residents in Quebec are not eligible.
HSBC Youth Savings AccountNo minimum age19$0$0free and unlimitedNot stated on websiteInterest rate isn’t advertised

Compare with regular savings accounts

Name Product Interest Rate Promotional Interest Rate Min. Bal / Min. Deposit Account Fee
EQ Bank Savings Plus Account
1.25%
N/A
$0 / $0
$0
Enjoy zero everyday banking fees, free transactions and no minimum balance with a Savings Plus Account from EQ Bank.
CI Direct Investing High Rate Savings Account
0.50%
N/A
$0 / $0
$0
With no fees and no restrictions, you'll earn 0.5% interest with the CI Direct Investing High Rate Savings Account.
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Tax implications of savings accounts for kids

Keeping your child’s funds in a youth savings account will allow them to earn interest, but this interest is considered taxable income by the Canada Revenue Agency (CRA). This means that your child will have to pay tax on any interest they earn if they make more income than the basic personal income tax amount (described below).

What is the basic personal income tax amount?

The point below which income isn’t taxed by the federal government is referred to as the “basic personal amount” and it changes every tax year. For 2019, every taxpayer can earn taxable income of $12,069 without paying taxes on it. This amount increased to $12,298 for 2020.

You could owe tax on any money you give to your children

There are a couple of rules you should be aware of with youth savings accounts that could cause you to pay more on your taxes or make your child’s taxable income higher. You’ll want to keep these rules in mind if you intend to give money to your children or you think you can split your business income with them to avoid paying taxes on your dividends.

Tax implications of opening a kids bank account

Advantages of putting your child’s savings in an RRSP

As soon as your child starts to earn an income, they can file a tax return to generate RRSP contribution room. This will allow them to open their very own RRSP and start saving for their retirement. It will also let them defer income so that they can get a break on their tax return.

RRSP programs that can benefit youth in the short term

Aside from saving for retirement, there are two RRSP programs that could benefit your child in the short term.

  1. Home Buyers’ Plan (HBP). This program lets your child take money out of their RRSP to buy or build their first home when the time comes. In 2019, the withdrawal limit for this program was $35,000 to pay for a first mortgage. The only caveat is that this money must be repaid in 15 years to avoid taxes.
  2. Lifelong Learning Plan (LLP). The LLP allows your child to withdraw money from their RRSP to pay for full-time postsecondary education. In 2019, the maximum yearly withdrawal limit was set at $10,000 per year, up to a total limit of $20,000. Your child will have 10 years to repay this money without being taxed.

How to compare savings accounts for kids?

When deciding on which savings account to choose for your child, here are some factors to consider:

  • Interest rate. The interest rate on youth savings accounts can make a big difference to how much your child saves. Aim for a no-fee account that gives the highest interest rate possible (and avoid getting sucked in by high introductory rates that decrease over time).
  • Fees. Most youth savings accounts don’t come with monthly fees. That said, you should keep an eye on monthly withdrawal limits as well as transaction fees (including Interac e-Transfer fees that can sometimes cost extra).
  • Minimum opening deposit. Make sure any account you open doesn’t require you to put down a minimum opening deposit. You should also be sure that you won’t need to keep a minimum balance in your account to keep it active.
  • Maximum age. Some savings accounts for kids max out at 12 years of age, while others go up to 19 years. Make sure you pick an account that will accommodate your child for many years to come.
  • Default account at maturity. Most youth accounts will default to an adult account that comes with a fee when your child reaches the youth account’s age limit. At this time, you may want to request a new account or transfer to a new bank to save money if the default account doesn’t seem like a good fit for your child’s needs.

Pros and cons of youth savings accounts

Pros

  • Compounding interest. Your child’s savings can grow year after year since they will earn compounding interest on their investments.
  • No fees. Many savings accounts for kids come with no monthly fees and unlimited free transactions, so your child’s savings won’t be eaten up by fees.
  • Teaches financial literacy. Opening a youth savings account can teach your child how to budget and properly manage their finances in the future.
  • No age minimum. You can open a youth savings account for your child at any stage of their development (even when they’re infants).

Cons

  • Gains may be taxable. Your child may have to pay income tax on the interest they earn if they make more than the basic personal income tax amount.
  • Expires at a certain age. Your child won’t be able to use their youth savings account beyond a certain age (which varies by provider but often caps out at 18 years old).
  • Not available with all providers. Youth savings accounts aren’t available with many providers, including popular digital banks such as EQ Bank and Simplii Financial.

Bottom line

Opening a youth savings account for your child is an excellent way to grow their savings and teach them financial literacy. Find out how to compare savings accounts for kids, and learn which account might offer the best mix of features and benefits for your child’s unique set of needs.

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