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The Ultimate Guide to Opening a Savings Account for Kids as an Expat in Germany

When it comes to securing your child’s financial future, a saving or investment account is a very reliable tool. In Germany there are various options for children’s savings and investments, designed to help parents and guardians teach young ones the value of saving from an early age. Finding the right option for your family is crucial to maximise the growth your child's savings, so we have put together this blog to explore some of what's on offer for children in Germany, with some tips to help you choose the most suitable savings account for kids.



Savings Account for Kids

Types of Children’s Savings Accounts in Germany

It’s essential to understand the main types of savings accounts available for children in Germany. Generally, you’ll come across three main types:


Passbook Account: This is a traditional savings account often used for long-term savings. It’s a low-risk option, offering modest interest rates, and typically no fees.


Instant Access Savings Account: This account offers more flexibility, as funds can be withdrawn at any time without penalties. The interest rates for these accounts tend to be variable and may fluctuate depending on the economic situation.


Fixed-Term Deposit Account: This account locks away savings for a fixed period, often with higher interest rates in return for limited access to the money during the term.



Current Interest Rates for Children’s Savings Accounts

Interest rates in Germany, as in many other European countries, have been relatively low in recent years. This is largely due to the European Central Bank’s policy to maintain low interest rates to stimulate the economy. However, some banks still offer competitive savings rates for savings account for kids.



Savings Account for Kids


Factors to Consider When Choosing a Savings Account for Kids

While interest rates are an important factor, there are several other aspects you should consider when selecting the right savings account for your child such as:


Account Fees: Most savings account for kids in Germany come without fees, but it’s always worth double-checking. Look for accounts that offer fee-free management to avoid eating into savings.


Withdrawal Flexibility: Depending on your savings goals, the flexibility to withdraw funds might be crucial. If you are saving for long-term goals such as university, a fixed-term account might be suitable. However, for shorter-term needs or emergency access, an instant access account would be better.


Initial Deposit Requirements: Some banks may require a minimum deposit to open an account. Ensure the initial deposit is reasonable for your budget.


Parent/Guardian Controls: Most banks will offer a joint account with parental oversight, allowing parents to manage the account until the child reaches adulthood. It’s essential to choose an account that offers adequate control options.


Interest Rates on Long-Term Savings: While the immediate rate might be a deciding factor, it’s also important to think long-term. Some banks offer better interest rates for fixed-term accounts, which could yield better returns over time.



Tax Implications for savings account for kids in Germany

Germany has a tax-free allowance for income from interest, and for children, this limit is €1,000 per year. If the interest earned on the savings exceeds this amount, it may be subject to capital gains tax, which is set at 25%. In most cases, children’s accounts will not exceed this threshold, but it’s still worth keeping in mind as your child’s savings grow.



Savings Account for Kids

How to Open a Savings Account for Kids in Germany

Opening a savings account for kids in Germany is usually a straightforward process. You’ll typically need the following:


- Proof of identity for both the child and the parent (such as a passport or ID card).


- Proof of residence, such as a registration certificate.


- Birth certificate of the child.


- Some banks also offer online applications, but many will require at least one visit to a branch to complete the process.



Savings Account for Kids

Choosing the right savings account for your child in Germany can make a significant difference in their financial future. While interest rates remain relatively low across the board, some do offer competitive options.


Be sure to consider the account's flexibility, fees, and parental controls to find the most suitable option for your family’s financial goals. Starting a savings habit early can set your child up for long-term financial security, and with the right account, you can help them grow their wealth effectively.


And don't forget to reach out to our expert advisers her at Granite Financial, for any of your financial queries!

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