What is a children’s bank account?
A children’s current account offers a way for your child to access their money without needing to carry cash around.
They can pay their pocket money, birthday money, cheques and any income from jobs directly into their bank account.
They’ll then be able to use the account for their personal spending, and as a smart way of learning how to manage their money – within sensible limits designed for children.
How old does a child have to be to open a bank account?
Children’s current accounts are usually available to children aged between 11 and 18, but some banks may only offer them to children aged 16 or older.
This is different to children’s savings accounts, which most banks and building societies will let you open for children aged seven and up.
You’ll usually have to open your child’s current account on their behalf if they are under 16.
How do children’s current accounts work?
Children’s bank accounts work like adult current accounts – money is paid into the account, and your child can make withdrawals from an ATM using either a debit card or a cash card.
If they have a debit card, they can use it to make purchases online and in stores.
Children can also set up direct debits on their account, and benefit from services such as mobile banking. But unlike an adult current account, children’s accounts don’t offer overdrafts, which means your child can’t borrow money and they won’t be charged any fees or interest.
If there isn’t enough money in the account to cover the direct debit, the payment is likely to bounce and there may be a fee involved – however it’s likely to differ between banks and building societies. You should check with them before opening an account.
How to choose the best children’s bank account?
When deciding on a children’s current account you should first consider its main purpose.
Is it to help build up the child’s savings? If so, you may be better looking at children’s savings accounts, which normally pay a higher rate of interest.
However, if it’s to help the child learn how to manage money – especially through online and mobile banking – a children’s current account may be a better option.
There are several things to consider that can help you decide:
- Interest rate: How much interest your child will earn on the balance in their account. Remember to check if interest is capped – for example, it may only be paid up to a certain balance
- Rewards: Incentives such as cashback with High Street retailers might be included
- Digital access: This will allow children to more easily manage their account. Check MoneySuperMarket’s Digital Bank Rating to see how highly the bank scores
- Customer service: If your child loses their card or needs help managing their account, helpful customer service can make all the difference
What are the benefits of a children’s current account?
The benefits of a children’s current account include:
- No overdraft facility: So your child can only spend what they have in their account
- Daily withdrawal limit: A hard limit to how much cash they can withdraw each day
- Money management: Online, mobile and telephone banking allow your child to check their balance, view their statements and send money to their savings account (where applicable). Children aged 11 and 12 may need permission from their parent or guardian to access mobile banking
- Text and email alerts: Children’s bank accounts can also come with text and email alerts to let your child know if a payment has been missed, if they need to pay money in to cover a payment or if their balance has gone below zero (this may happen if a payment goes out and there are insufficient funds in the account – there won’t be a charge)
- Earn interest: Money in children’s bank accounts will usually earn a small amount of interest
- Open an account with £1: Some providers only need you to pay in £1 to open an account for your child
- No monthly fees: Children’s current accounts don’t tend to charge monthly fees
- No automatic debit card: A parent or guardian will normally need to give permission for their child to have a debit card (provided they’re under 16)
Who can open a bank account for a child?
Children can open their own current accounts when they turn 16, but if they are younger they will need a parent, guardian or grandparent to do this for them.
How do you open a children’s current account?
It differs from bank to bank. You may be able to open a current account online or through video banking, or you may need to apply online and then go into a branch to complete the application.
To open a children’s current account, you’ll need:
- proof of ID for your child (their passport, birth certificate or provisional driving licence, for example)
- proof of ID for yourself, and proof of your address (a utility bill from the past six months, for example).
If your child is 16, they can apply without a parent or guardian present – they’ll just need proof of ID and proof of their address (this might be a letter from their school).
Are children’s current accounts taxed?
Both children and adults have a personal allowance which this tax year (2020/2021) is worth £12,500. That means everyone can earn up to this amount before it gets taxed.
This is boosted further as children are also eligible for the £5,000 starting rate for savings and the £1,000 personal savings allowance, so they can earn £18,500 a year before paying tax.
However, if you are giving your children money to put in their account, it’s important to be aware that if that money earns more than £100 in interest a year, the whole lot will be taxed at your tax rate.
The £100 limit doesn’t apply to money:
If a child is liable to pay tax, any tax due on interest earned will need to be paid to the appropriate tax authority. For more information, see the HMRC website.
What happens to your child’s bank account when they turn 18?
Your child’s bank account will normally upgrade to a standard adult current account automatically when they turn 18.
Alternatives to a bank account for children
If you’re looking for an alternative to a children’s bank account that doesn’t involve them carrying around a lot of cash, then a prepaid card is another option.
You can load your child’s prepaid card for free, and they’ll then be able to use the card to withdraw cash and make purchases.
Some prepaid cards also offer real-time spending notifications to help your child manage their money. Prepaid cards do not usually come with a current account, so your child won’t have a sort code or account number, but they can still make payments online.
Comparing children’s current accounts
You can compare children’s current accounts using MoneySuperMarket. Sort children’s current accounts by interest rate, customer service score, digital bank rating and brand to find the right current account for your child.
You’ll also be able to see which rewards each account offers, and any terms and conditions that come with it.