Many parents like to keep money aside for their children’s future. If children are told about money and finances from a young age, they grow up to become responsible individuals and citizens. There are many ways you can collect money for your kids and one of them is by means of a bank account. Though bank accounts for adults are a popular and hot topic, hardly anything is spoken about bank accounts for kids. Though you can go for long term personal loans, It’s always a good practice to start putting money into your children’s bank accounts for their education or wedding in the future.
What Are Bank Accounts?
A bank account is an arrangement with a bank of your choice. You can deposit and withdraw money to and from your account respectively. You can also set up standing orders for regular monthly payments like rent, utility bills, mortgage, etc. For saving money with them, banks also pay a certain rate of interest on your savings. This helps you to grow your savings. There are different types of bank accounts like Current account, Savings account, Post Office Card account, Basic Bank account, Joint account and Bank accounts for kids.
What Are Bank Accounts For Kids?
If your child is above the age of 11, you can easily open a bank account for him or her. This inculcates the habit of saving in children from an early age. When they save enough, they can buy anything they want with their debit card. Your children will learn to be independent of their finances. Basically, they are the same as adults’ current accounts but are for kids below the age of 18. They usually come with some restrictions on how to use them. There is no need for worry as they’re minors and can’t take any loans. Once you set up bank accounts for your kids, explain to them in simple language how they work and how they can invest their money. Avoid using jargon as it’ll only increase the confusion in their minds.
Who Can Open Bank Accounts For Kids?
Bank accounts for kids are meant for individuals who are at least 11 years of age. Some banks may have a higher age limit like 16 years. Till 18, they’re eligible to open bank accounts as children. After this age threshold, the bank account will be upgraded to an adult’s current account. You, as a parent, can help your children in getting their own bank account. Banks let children make financial decisions and run their account themselves. The parent or guardian can help pay money into their account and give them financial advice when necessary.
What Are The Features of Bank Accounts For Kids?
Each children’s bank account comes with different features but some of the common ones are:
- Receive Money:
If your child turned 16 last month, it’s likely that he or she will be doing some kind of job. Once someone reaches 16, employers need to pay them by PAYE as per UK child employment laws and regulations. You may also deposit some deposit into their account every month. They can receive money into bank accounts for kids by cash, cheque or bank transfer.
- Make Payments:
When you open a bank account for your children, they’ll get a debit card or cash card which they can use to make payments. With this card, they can make purchases in shops, withdraw money from cash machines and also shop online. If your kid is under 16, the bank will ask your permission before issuing a debit card for the account.
- Net Banking:
Your child is also eligible to carry out transactions between accounts with the help of Internet and Netbanking. They can check their current account balance, move money from one account to another or send someone money.
- Direct debit:
Direct debits are also known as standing orders. These are monthly payments that your bank to make on your behalf. Bank accounts for kids offer this special feature of requesting a direct debit for some regular expense like a monthly phone bill.
How Can They Manage Their Bank Accounts?
We give some basic ways that will help your children manage their own bank accounts.
How To Check Balance:
- Sign in to Mobile or Internet Banking
- Set up text alerts for change in balance
- Check your statement by post or online
- Visit the bank branch
- Phone your bank
- Check it at a cash machine
How To Use Mobile Banking Services:
- Pay a person or company
- Check your balance
- Move money between your accounts
- Set up standing orders, change or cancel them
- Report a missing debit card
- Send a secure message to your bank
How To Withdraw Cash From an ATM:
- Insert your card into the ATM machine
- Enter your PIN
- Check your balance if you’re not sure how much is there
- Choose the amount of cash you need
- Collect your card and cash from the machine
Where Can I Apply For Bank Accounts For Kids?
Almost all banks offer bank accounts for kids. There are some things you need to check before choosing an account. Choose a bank which has its branch and ATM in your locality, and provides a debit card and Internet banking facility. You also need to check the age limit as in some banks, children are only eligible after 16. You should also find out what the minimum balance and tell your children that they must always have that much money in their current account. Check for any special privileges like:
- Interest on your balance
- Rewards you get when you spend e.g. cashback
- Freebies like discounts on driving courses
How Do I Apply?
You can open bank accounts for kids online with little effort. It gets done in a matter of minutes. You may need to visit the branch along with your child to provide identification documents.
What Documents Do I Need?
Banks usually ask for two documents to establish your identity when you open an account for your child. These are:
- Proof of Name- Passport, Birth Certificate or Driving License
- Proof of Address- Utility bills or bank statements in parent or guardian’s name
Are There Any Charges To Operate The Bank Account?
It’s unlikely that your child will have to pay monthly fees or overdrafts. But crosscheck the terms and conditions. Any interest is normally paid without deducting tax.
Bank accounts for kids are an excellent way to instil financial confidence in your children and make them capable of managing their money.