A device for a child, or how to give a child a good start into adulthood

The birth of a child is an occasion for pride and happiness - parents do everything to provide him with the best condition and make him happy. Although raising a child and providing him with all the necessary items, food or clothing is associated with huge financial costs, it is worth considering setting aside capital from the first minutes of life, which he will need in adulthood. Upon reaching adulthood, many children leave the family home, but it is difficult for them to immediately start any work that will allow them to earn a living. With savings in your account, you can give them a great start into adulthood. How can you save? One of them is a place for a child. What is it and is it worth wearing this product?

What is a child deposit?

A deposit for a child is nothing more than a traditional bank deposit created with the future of a child in mind. Opening a deposit involves the payment of a certain capital, which will be in the hands of the bank during the contractual period, in order to be able to pay it in the future along with the interest due. A child deposit is a bank deposit that can be found in the offer of almost every bank operating on the Polish financial market. His work is really not difficult. It is enough to deposit the saved funds and choose the period for which you want to allocate them.

A short-term deposit option is available as banks offer an annual, semi-annual or even quarterly deposit, but long-term deposits are also available, which assume that the invested funds will be placed on it for several years. It is worth remembering that the presence of a deposit does not mean that you must regularly deposit additional savings into the account - only the capital deposited when opening a deposit is frozen. However, if there is a need for early withdrawal of funds from the child deposit, this can be done at any time. Most institutions, however, adhere to the rule that early termination of the deposit entails the loss of earned interest, which means that in such a situation the deposit will not bring any profit. It is also worth noting that the presence of a deposit does not entail any additional fees. Banks do not charge a commission for monthly maintenance of children’s deposits and for their opening.

What to pay attention to when opening a deposit for a child?

The choice of the child’s contribution should be taken carefully. Depending on which bank you open a deposit in, you will first of all be able to count on different earnings. Profit on the deposit depends on several factors - mainly on the interest rate and the frequency of interest capitalization. Of course, the more capital you invest, the more you earn. Therefore, it is worth considering this type of offer when you have the appropriate savings to earn for your child’s future.

When choosing deposits for a child, you should pay attention to the following criteria:

• deposit interest rate - banks offer different interest rates depending on the offer and the current economic situation in the country. The higher the interest rates are set by the National Bank of Poland, the higher interest rates can be found among bank deposit offers. It is worth choosing the deposit with the highest interest rate because it will lead to higher profits.
• deposit term - depending on how long you can freeze your capital, choose the right time to deposit funds. Of course - the longer it is, the more it will allow you to earn.
• minimum and maximum amount - some institutions offer products that have strictly defined minimum and maximum amounts that can be invested. Check if the offer you have chosen allows you to deposit your available funds.
• interest capitalization - can occur according to a certain schedule, for example, once a month or once a quarter, or only at the end of the deposit term. The more frequent the frequency of interest capitalization, the higher the return on investment will be. After each capitalization, the earned interest is added to the capital, which means that they will also work and influence the increase in savings.
• making a deposit before the expiration of the contract - most institutions have decided that when withdrawing funds from the deposit before the end of its term, the earned interest will not be paid, so the client will receive only the capital that he invested initially. Therefore, you should pay attention to this situation, especially if you want to open a long-term deposit.
• need for additional products - some banks require the opening of a personal account from which funds must be deposited. However, having an account can come with fees, so you should pay close attention to this as well.
• how to open a deposit - Depending on the bank, you may encounter various options for opening a deposit. Choose the most convenient for you - you can read about each of them below.

How to make a deposit for a child?

Banks allow various ways to open a deposit for a child. In most cases, you will be required to show proof of the parent’s identity, such as ID, but it can also happen that the bank will ask for the child’s school ID or passport or ID, if available. Some institutions require the child’s birth certificate or proof that the person opening the deposit is the parent. It is also worth adding that if the child is under 13 years old, he does not need to check in with the parent at the bank - only the presence of a guardian will be enough.

So, how can you open a deposit for a child? The following options for opening a child deposit are possible:

• through the Internet - opening a deposit online is the fastest and easiest way to make a deposit. You can apply online at any bank or through a mobile application or Internet banking at a bank where you have a personal account. Then all your data will be downloaded from the banking application.
• at the bank branch - if this bank has a branch in your area, you can come in person and open a deposit for a child in the presence and with the help of a consultant in the bank. Be sure to bring the relevant documents with you.
• by phone - Another option to open a deposit without leaving your home is to talk to a consultant on the bank’s hotline.

Is it worth using a child deposit?

A deposit for a child is one of the best gifts you can give him. Why? Well, many young people entering adulthood don’t have any means to get them off to a good start. Rent an apartment, buy a car, dream trip or pay for your studies - where to get the money? The solution may be the funds saved on the deposit. Long-term deposits allow you to earn a lot, for which your child will definitely thank you.

Regardless of the amount of savings, it is worth thinking about opening a deposit for a child. You can put the money that the child received for baptism, communion, birthday or your savings, which will be able to “work” on the deposit for several years, making a profit. It is worth remembering that from the interest earned, you will need to pay tax due on the deposit. In Poland it is called the Belka tax and is 19 percent. This is a tax on interest, not paid-in capital, which is often confused.

Another argument in favor of making a deposit for a child is the fact that this type of investment is associated with no risk of losing funds, since bank deposits are protected by the Bank Guarantee Fund. This means that funds up to EUR 100,000 are covered by the guarantee.

Other ways to save money for your child

If a bank deposit for a child is not the product that interests you, you should find out about other ways and opportunities to save money for a child. Savings products can be found both at banks and other financial institutions. It is worth comparing them not only in terms of profitability, but also financial opportunities - think about how often you can deposit capital and how much money you can save. By answering these two questions, you can easily select a product based on your preferences and capabilities.

How to save for a child? The most popular ways:

• personal account for a child - a traditional bank account that you will serve until your child reaches the age of majority. If you want your child to use it, you can choose the account to which the card, sticker or contactless wristband will be issued and set a daily spending limit.
• savings account for a child - implies an obligation to make regular payments. You can set up a standing order from your personal account and, for example, decide to transfer, for example, PLN 200 to a savings account every month. The amount saved, along with any additional interest, will be available to the child after they turn 18.
• securities - Now, for example, Treasury bonds with high interest rates are popular. Check out what family treasury bonds are and invest your capital.
• Investment funds - although these types of financial instruments carry risk, by choosing to systematically contribute to a long-term fund, the risk is reduced, and earnings can be impressive.