I bank with Bank of America and they offer a custodial savings account. I like this option because I can transfer money each week from my checking account to this account. I don't understand about why they report interest rate to child's credit report. Any help there would be great. Also are there any other investments I can start besides the savings account that requires small amount of money up front for my three yr old then also start for my 1 yr old.
Thanks
2006-07-16 06:52:17 · 5 answers · asked by jessjacobsq 1 in Business & Finance ➔ Investing
The reason why they report the interest rate to the credit bureaus is the amount of money you earn factors into calculating your credit score. So, the amount of interest you earn is used to calculate that score.
If you don't like that, why don't you just start a savings account in your own name and transfer it to your kid when he/she turns 18? If it is too big with too much money, you may have to pay a gift tax, though.
2006-07-16 06:57:39 · answer #1 · answered by Princess 5 · 0⤊ 0⤋
Personally, I think you are doing the right thing at this stage with the exception that Bank of America doesn't pay too well. ING tends to have the highest interest rates.
One other investment choice is to put the money in stocks which can have a higher return. The downside is that most brokerages charge a fee if the investment amount is below their minimum amount.
A 529 is a poor choice for small investment amounts at this point. Since your child's account is probably not earning enough to be taxable anyway, there is no need to tie up the money.
2006-07-16 07:27:23 · answer #2 · answered by Anonymous · 0⤊ 0⤋
I would recommend a 529 education savings plan. These are state sponsered, tax deferred college savings plans. Almost all states have them now. You can choose any plan offered by any state. I recently choose the plan for the state of Ohio because it has good investments, low expenses, and very low balance requirements. You can start it out with as little as $50 and add to that as often as you are able. You can find more information about 529 plans at www.savingforcollege.com. You can find out about the state of Ohio plan that I mentioned at www.collegeadvantage.com. I would also recommend that if you set this up or even if you choose to use a savings account that you tell your family and friends not to give your child a bunch of useless plastic stuff for Christmas and birthdays but rather make a small donation to Jr's college savings account. If you start doing this when your child is young they will get use to it. Good Luck.
2006-07-16 07:14:52 · answer #3 · answered by Gator714 3 · 0⤊ 0⤋
Hi, it is great that you are planning ahead for your children. This will give your children many more options later. What do you want out of the savings vehicle most? Convenience, growth, safety, liquidity? So many things to consider, right? It's really much simpler. Obviuosly the local banks wish to warehouse our money and offer convenience, but they will never again combine that with growth. Look into the companies that offer all of these things and also have either tax deferred or tax free accounts.
2006-07-16 07:06:32 · answer #4 · answered by Millionare Club 1 · 0⤊ 0⤋
Either a UTMA or UGMA account, depending upon your state should be opened AND go to www.bankrate.com to find the best rates available.
Read real hard on 529 plans they have their plusses and minuses. Understand them well before entering into one.
2006-07-16 08:39:39 · answer #5 · answered by OPM 7 · 0⤊ 0⤋