What do you do when your kids are eager to save big bucks, but your local bank doesn't exactly roll out the red carpet for them?
Jane Madison of Baltimore found out the hard way when she opened an account for her 10-year-old son, Bennett, with about $300 in savings and money he had been given for birthdays.
When Bennett's first monthly statement arrived, service charges had wiped out all the interest he had earned -- and then some.
It took several phone calls before a bank official finally conceded that the usual service charge on a small account should be waived when it's opened for a minor.
Because Bennett is a minor, his mother had to open an account -- which she controls -- in both their names. That means her son can't make withdrawals without her signature.
Bank policy on accounts for children varies among states, banks and even branches, depending on state law and a bank's "appetite for dealing with minors," says Sue Armbruster of First National Bank in Chicago.
First National allows children to open their own savings accounts and make deposits and withdrawals. Other banks will let parents sign a release allowing the children to make withdrawals from their account on their own.
Young Americans Bank in Denver, where all customers are under 22, sets up joint accounts for children under 18 in the name of both parent and child, with two signatures required for most transactions.
"Here, parents need their child's authorization to make a withdrawal," says bank official Cindy Culkin.
Make sure your child's Social Security number is used as the tax-identification number on the account. That way, interest earned will be treated as your child's income for tax purposes.
Children can make up to $600 in investment income in 1992 without having to pay any taxes.
Because of all the bank red tape, school-based savings programs are becoming popular again in many places.
PTA volunteers collect children's coins at school once a week, record the deposits on a computer and then take the disk and the money to the sponsoring bank.
For more information, call the Save for America Campaign at (202) 746-0331.