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Minor Accounts, Major Banks

Financial Institutions Cater to Kids 17 and Under.

Piggybanks are a great way to teach preschoolers how to save money, but in the end, what’s the point if that pink, plastic porcine can’t earn interest? Children’s allowances are better off at the bank – particularly in savings accounts designed for young customers.

A growing number of financial institutions across the nation are beginning to cater to clients under the age of 18. Seventy-three percent of children in the U.S. have savings accounts, based on a survey last January by the American Savings Education Council. Of that number: 66 percent are between the ages of 6 and 10; 78 percent are 11 to 14 years old; and 79 percent are between 15 and 17. About 16 percent of teens ages 15 to 17 say they have checking accounts, while 90 percent of children between 6 and 10 have piggybanks.

Not only do interest-earning savings accounts allow parents to be hands-off, but they also teach children the art of finance. “Kids want to be rich, too,” says Celina Fowler, assistant to the marketing director at Hawaii National Bank, which offers a youth-only savings account called WizKids. “Parents like it because their kids learn the meaning of money, and kids like it because they learn how to manage their allowance.”

WizKids, which bears a 2 percent annual percentage yield, is for customers between the ages of 5 and 17. All that is needed to open an account is $10. When a child becomes a customer of Hawaii National Bank, he or she receives a gold coin and four state quarters as tokens of appreciation. Special days are not forgotten, either. All WizKids clients receive gift certificates on their birthdays.

WizKids is a traditional passbook program that rolls into a regular savings or checking account once the account holder turns 18. ATM cards are available only to those above the age of 12.

Youth these days have more money than ever. The 31 million teen-agers across the nation have a total discretionary income of $151 billion, or an average of $5,000 each, according to a financial portal for teens called DoughNET Inc.

The top two reasons for saving (and spending) are education and car-related expenses. Forty-three percent of children between ages 15 and 17 save for cars, while 38 percent save for college tuition. The rest save their money for entertainment. American Savings Bank offers MoneyHune Savings for children under the age of 12. Once the account holder turns 13, he or she can choose to transfer the passbook account to a regular savings or checking account.

“Passbooks might seem old-fashioned, but it’s a savings account, something you would use for a purpose,” says Diane Shin, vice president for branch sales and products. All that is needed to open a MoneyHune Account is $10. And as long as it continues to have a balance of $5, it bears a 2.02 percent annual percentage yield.

No matter how little a child’s allowance may be, industry members urge parents to teach their kids the value of money – at a very early age. Because as they grow older, leave the nest and attend college, finances only get more complicated.

Here’s proof, too: according to a study by Texas Tech University, undergraduate college students in the U.S. have an average of three credit cards and carry an average credit card debt of $1,700. But only 50 percent of students pay their debts in full each month.

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Hawaii Business,October