On August 28th, 2009, Affinity Bank was closed by the FDIC and all deposit accounts were transfered to Pacific Western Bank, San Diego, California.
Affinity Bank has been offering this deal for over a year and a half and it’s a doozy of a deal. It’s never been on my radar screens because I don’t have any kids, but they’re willing to pay Kids Only Savings accounts 10% on the first $500 in their account. This deal has made its way to the Fatwallet Forums, where I originally read it, and onto a few blogs, after I did a search, but it looks like it’s probably going to be around a while. If you have any kids, there isn’t any reason why you wouldn’t jump at the chance to both earn an incredible interest rate (though not actually that much money) but, more importantly, teach your children fiscal responsibility at an early age.
If you have a child under the age of 16, they are eligible to open an account. You, as the custodian (and over 18), will need to open an account with Affinity too (Minimum deposit is $100 for Free Checking, $500 for Free Savings) too. As for your child’s account, the first $500 in the account will earn the promotional 10% APY interest rate but any amount above that will earn the standard Gold Savings rate which is small compared to ING Direct or FNBO Direct. The minimum deposit for the Kids Only Savings account is a mere $1.00. Now, with your account, if you opened a checking account and manage to have a recurring direct deposit – there’s a $75 bonus after 90 days.
As for taxes, the 1099-INT will be in your child’s Social Security Number so the tax burden should be nil unless your child earns more than $700 a year. If you’re children are still very young, you probably want to open it up just so you can get the easy $50 a year. But once they do get older and start to understand the concept of money, the account would be a great way to teach them about bank accounts, interest rates, and the basics of personal finance. The beauty of this offer is that your children will get 10% until they turn eighteen, despite the cutoff age for account opening is sixteen. As for how long this offer will be available, that’s up to Affinity.