Best Kids Bank Accounts 2024 -

Secure banking guide for children

Bank account for kids are current accounts with specific restrictions, safeguards and control mechanisms. The money in a child’s bank account legally belongs to the child.

This comprehensive guide will help you gain a deeper understanding of what kids bank accounts offer, including requirements, benefits, potential pitfalls and legal implications.

#Account Requirements

Specific requirements can vary, each bank has its own criteria and terms when it comes to these accounts.

Typically, a parent or guardian must open the account on behalf of the child, and there are age limits to consider, with many requiring the child to be at least 11 years old. Usually, the child and the parent or guardian must be UK residents.

Certain banks might also demand you to have an existing account and hold a specific account type with them.

#Restrictions and Limitations

As we mentioned above, unlike adult accounts, children’s bank accounts come equipped with certain limitations.

• Overdraft facilities are not available, essentially safeguarding children against accruing debt.
• Transactions, particularly online, may require parental authorization.
• Age innapropriate purchases, like gambling, and off-licence store purchases, may potentially be blocked.
• There could be rigid daily limits on withdrawals and expenses.
• Services like Apple Pay and Google Pay are available only for children aged 13 and above (banks have no control over this).

It’s important to note that additional features might be accessible once the child turns 16.

#Exploring Alternatives

If the idea of an all-out bank account seems overwhelming, starting with prepaid cards could be an easier first step. They provide similar spending controls and top-up capabilities, usually with the added convenience of an app.

There are a number of differences between a child bank account and a prepaid card, they are typically accessible to younger ones, from the age of 8 and up.

This guide, however, does not encompass prepaid cards, nor are they included in the comparison list above.

#Benefits of Early Banking

The benefits of a child owning a personal bank account should not be undervalued. It sparks the early understanding of concepts such as savings, and distinguishing between wants and needs. Independent money management can teach critical life skills like budgeting and saving.

There’s no chance of overdraft-induced debt, and kids can also benefit from earning interest on their saved funds, although interest rates for these accounts tends to be lower compared to adult accounts.

The world is becoming progressively cashless and individuals aren’t carrying cash as frequently as in our youth. (Frankly, we hardly resort to using cash ourselves nowadays.)

#Potential Risks

Initially, we were unsure of the risks associated with these children’s accounts, yet after further investigation, it became apparent. While they certainly offer advantages, it’s vital to be aware of possible risks.

Banks marketing directly to children can create an illusion that mindless spending is the norm. It’s crucial that we educate our kids about the significance of value versus impulsive buying.

Our nation obsessed with consumerism and drowning in debt, the banks are now sowing the seeds for its next crop, our children - as observed by The Guardian

The laws concerning advertising to children have improved greatly since the publication of that article by The Guardian. Despite these improvements, the rise of social media has contributed to the reinforcement of mindless spending, particularly through some influencers.

A recent study by the Money and Pensions Service (MaPS) revealed that fewer than half of UK children receive education about money management at home or in school.

These figures are alarming. We are advocating for parents to engage their children in conversations about money and incorporate these lessons into daily activities, such as grocery shopping, budgeting, or discussing earnings from their part-time jobs.

To mitigate potential risks, it’s essential that only the child and their appointed guardians have access to their accounts. This prevents unauthorized use and protects children from increasing online fraud risks.

#Best Practices for Parents

Child-friendly bank accounts are largely comparable across the board, with many of them being complimentary. Banks such as Lloyds, RBS, Natwest and the Royal Bank of Scotland virtually provide identical accounts, right down to the account names.

Nevertheless, it is recommended for you to research and fully comprehend the terms and conditions before settling on the most suitable bank account for your child.

Some of the important aspects to ponder over include:

• Limitations determined by age
• Associated costs (spending, withdrawals, and overseas)
• Extra benefits your child could enjoy
• Reviews about the bank’s customer service
• Ease of access to internet banking or smartphone apps
• Safeguarding measures of the bank’s app
• Spending and withdrawal controls that you can manage
• The overall safety of the child’s mobile device (for instance, is there a passcode setup?)
• The future of the account once the child turns 18
• Detailed guidance on using the app and understanding the bank account (help with initiation)

#The Account Opening Process

The process to set up a bank account for your child varies amongst the banks. A general age regulation seem to apply across all banking institutions

For youngsters under the age of 16, the account opening procedure needs to be initiated by a parent, guardian, or grandparent, normally in person at a banking branch, though some banks offer an online option.

On the other hand, those who are above 16 can open their account independently. However, this requires the submission of certain legal identifiers such as valid proof of identity most likely at the branch.

#Legal Implications

In legal and financial matters such as divorce or dissolution of a civil partnership, there are scarce situations when children’s finances may be considered part of the assets to be divided.

It is crucial for parents to understand these limited scenarios where children’s money might be factored into financial agreements. This may happen, for instance, if your former spouse or civil partner purposely deposited their money into your child’s account to prevent you from accessing it.

We strongly advise seeking professional assistance to accurately understand your legal standings.

#FAQs