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Youth Savings Account

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Question: 
We are about to consider offering a youth savings account whereby for every book a child reads, the bank will donate $1.00 into the child's account. Is this a disclosure nightmare or what??? How would we advertise the rate/product?
Answer: 

You could use "Save as You Read" if no one else is using it. I don't really see a disclosure nightmare here. Do a normal ad for a savings account, making sure it conforms to Regulation DD requirements. The $1 contributions, if capped at $10 per year, would not be considered a bonus under Regulation DD. If not capped, you would trigger a lot of disclosures under 230.8, which would include the conditions for the bonus ($1 for each book read, paid when you ...), the APY, and all the things the APY triggers. Of course the $1 payments are not interest under Reg. DD, so they don't affect the APY.Then, you add the $1 credits to the amount of interest you report at year end on the 1099-INT.

First published on BankersOnline.com 10/17/2005

First published on 10/17/2005

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