Childrens current accounts

Choosing the best childrens current accounts

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A children’s current account can help your child get used to managing their money, with the help of restrictions designed to make sure they don’t overspend

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Current accounts for children

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, 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 do children’s current accounts work?

Children’s current 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 also use it to make purchases online and in stores.

Children can set up direct debits on their account too.

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.

How old does a child have to be to open a current account?

Children’s current accounts are usually only available to children aged between 11 and 18, and 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.

Benefits of a children’s current account

The benefits of a children’s current account include:

  • No overdraft facility: your child can only spend what they have
  • Daily withdrawal limit: a hard limit to how much cash they can withdraw a day – the daily withdrawal limit will usually be different depending on whether they have a debit card or a cash card
  • Money management: online, mobile and telephone banking all help your child manage their money their way. They can 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)

Things to keep in mind

There can be disadvantages to a children’s current account. These include:

  • The interest offered by children’s current accounts is often limited, so you may find you can earn more by putting the money in a children’s savings account instead
  • If your child is under 13, you will typically have to manage the account for them until they reach this age. You will also act as the account trustee

How do you open a current account for your child?

You can apply for a current account for your child online, but you will usually need to go into a branch to complete the application.

If your child is under 16, you’ll need to go with them into a branch to apply for an account. You’ll need to bring proof of ID for your child (their passport or birth certificate, for example) plus 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 or over they can apply for their account in branch without a parent or guardian present. They’ll just need to take proof of ID and proof of their address (this might be a letter from their school).

Children’s current accounts and tax

Both children and adults have a personal allowance which this tax year (2019/2020) 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:

  • given by grandparents, relatives or friends
  • in a Junior ISA or Child Trust Fund

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.

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