Calling All Banks! Do You Have "Interest" in Money?

I have a new pet peeve. It concerns the banking industry and my children. 

Remember passbook savings accounts? Remember interest rates in the late '70s and
early '80s? For people trying to secure a mortgage, it must have been pretty daunting. 
But for those of us who were kids at the time, it was great! With savings rates as high as 8% or more, we could actually see how saving money in a bank could actually make our money
grow. And at those high rates, our money was growing pretty quickly (let’s face it, we weren’t concerned with inflation or the real value of our money). We were learning a valuable lesson at a young age.

Today, everything’s different. Not only would an investment of $100 in a savings account only net you about 50 cents over a year, but high fees for these “insignificant” accounts might wipe out most of your $100! 

I have been searching for a bank that has a special program for children. Haven’t found one
yet. Let’s face it, there are so many valuable lessons that can be learned from an interest-bearing bank account. First, there’s the simple math lesson every time interest is added to the account. Second, there’s the lesson of what compounded interest is and how it works. Third, there’s the practice and pride in seeing your money grow over time.

I’m concerned that if our children don’t start saving their money when they are young, that as adults, the importance of saving will be lost. It certainly seems to be lost on too many Americans already!

I would like to challenge the banking industry (or maybe I should lower my expectations and challenge just ONE local bank) to develop a program for our children. After all, it’s clear from headlines in the papers every day that most Americans need more help in managing their money and understanding the whole saving/borrowing money thing.   

To get the banks started, here are a few of my recommendations:

• Offer a bank account specifically for children (ages 12 and under, perhaps?)
• Offer a measurable interest rate to teach the power of interest and compounded interest (even 5% would be exciting to a child)
• Set a maximum investment of $1000 so that the “cost” to the banks isn’t prohibitive
• Charge a small fee for going below a certain balance (say $10), so that the child can also learn about consequences for mismanagement of their money

I don’t believe the above outline should be too cumbersome for any bank to initiate. And, hey, the bank might even acquire some lifelong loyal customers from these programs.

As for me, I am going to continue my search for a “kid bank account.” Until then, I
think I might be opening “Bank Sheffield.” I urge all parents and/or grandparents to do the same for their children.