Personal Finance

Open a bank account for 3 year old?

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  • Jun 29th, 2007 1:43 pm
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Jr. Member
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Oct 23, 2005
133 posts

Open a bank account for 3 year old?

I wish to open an account for my 3 year old at a bank.

I figure this is a good thing to do as it will build up the child's credit rating, RRSP contribution room, etc.

Is this a good idea to do this.. If so, what is the best bank to go with for a child so young.. she's not even a student.

I can see that banks have accounts for students who are much older.. So what is there for a young 3 year old child?

Thanks
16 replies
Moderator
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Aug 22, 2003
15531 posts
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Niagara Falls
What does a bank account have to do with RRSP contribution room? That is calculated on income...
Sr. Member
Aug 6, 2006
553 posts
10 upvotes
Toronto
same for credit rating... u dont get it for having a bank account.

And btw, there is a good chance she will be hit with inactivity fees and u will see all your money gone.
Deal Addict
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Aug 22, 2004
2479 posts
38 upvotes
The child would have to sign...

Does your kid even know how to write yet? I mean... at 3?
Deal Fanatic
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Oct 25, 2003
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Did you get a SIN Card for her yet?
Deal Addict
Jul 4, 2004
3286 posts
157 upvotes
Ottawa
Just go to any (or most) banks and tell them you want to open an account for your child - most banks have no fee savings account for kids.

You'll need a SIN but that's it. The parents/guardian will have signing authority on it until the child reaches a certain age.

We got an account for our 1 year old (we deposit any money he gets as gifts in there).
Deal Expert
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Oct 16, 2001
75170 posts
1506 upvotes
Medicine Hat, AB
I got one for each of my kids when they were born. When they are under age they are just in trust to you till they get to be a certain age. Did that for birthday money, etc.

After signing up for RESP for them, we use their accounts now for the withdrawel for that. We put in out child tax into each and it comes from there.

Now that are two are older (10 & 7) we got them their own accounts, just so they get a responsibility for money and saving. They cant make withdrawels on their own yet (we have to be there) but they are getting a handle on saving and how interest works.

Its funny to see how different each one is. My daughter has lots of money in there, she saves money from bottle recycling, her allowance, etc while my son barely has any. As soon as he gets paid allowance, its gone the next day. But we dont give him advances.

All in all, Id get one. Its free and can be used in the future for them
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Sr. Member
Mar 21, 2006
505 posts
1 upvote
My fiance and I are expecting, and when I asked my advisor about RESPs, he mentioned that we needed to get a SIN for the baby before we can do that, so as soon after birth as possible.

I have never heard that just having a bank account affects your credit rating or RRSP contribution space however.
Newbie
Jun 21, 2007
93 posts
2 upvotes
Toronto
Saving account provides non-zero interest income.

Interest income (after tax return is filed and processed) can provide non-zero RRSP contribution room.

Makes sense or not?
Deal Fanatic
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Oct 25, 2003
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halbbitter wrote:
Jun 27th, 2007 3:26 pm
Saving account provides non-zero interest income.

Interest income (after tax return is filed and processed) can provide non-zero RRSP contribution room.

Makes sense or not?
So what is the RRSP contribution room for income of $5000 of interest (assuming that you even have a balance this large to make this much)
Newbie
Jun 21, 2007
93 posts
2 upvotes
Toronto
B0000rt wrote:
Jun 27th, 2007 4:22 pm
So what is the RRSP contribution room for income of $5000 of interest (assuming that you even have a balance this large to make this much)
18% of "earned income" (BTW does interest income count as such? I dunno)

And, AFAIK, even if you have $0.01 RRSP contribution room, you can put $2k there without being penalized and let it grow tax-free.
Member
May 23, 2006
239 posts
2 upvotes
halbbitter wrote:
Jun 27th, 2007 5:29 pm
18% of "earned income" (BTW does interest income count as such? I dunno)

And, AFAIK, even if you have $0.01 RRSP contribution room, you can put $2k there without being penalized and let it grow tax-free.
Interest is not earned income - has to be something that you do that makes money (this includes stuff such as rental income, profit sharing income, disability pension from CPP, etc.)
Member
Dec 31, 2005
211 posts
Assuming the attribution rules do not apply (which they likely will) No kid should pay income tax on the income as they would have the person deduction, thus having exemption on ~ 8,000 on interest income.
Deal Fanatic
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Aug 19, 2001
5086 posts
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Vancouver
halbbitter wrote:
Jun 27th, 2007 5:29 pm
And, AFAIK, even if you have $0.01 RRSP contribution room, you can put $2k there without being penalized and let it grow tax-free.
Since a 3yo is not likely to have other income anyways, you may as well put $2k or even $20k into a non-rrsp investment for them, it will still essentially grow "tax free"
Newbie
Jun 21, 2007
93 posts
2 upvotes
Toronto
grant wrote:
Jun 27th, 2007 7:32 pm
Since a 3yo is not likely to have other income anyways, you may as well put $2k or even $20k into a non-rrsp investment for them, it will still essentially grow "tax free"
shure, it doesn't make any practical sense. Just discussing the possibility itself (or more likely impossibility).
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