Opening a Children’s Bank Account: Everything You Need To Know

Considering opening a children’s bank account? It could be a good idea. Financial know-how from an early age is becoming more and more important – and having a bank account could help. Installing good financial habits in kids from a young age can help them to avoid future money worries, stress and even debt. Plus, with the increased accessibility of online shopping (thanks to our digital lifestyles), children need to know the basics of money earlier than ever.

Getting children involved in managing money from an early age can help them learn essential skills. A bank account can give them practical experience in budgeting, saving and managing money. This will help them start good habits – think financial awareness and independence – which will serve them well in later life
But, before you open that account on their behalf, it’s important to understand the benefits, features, and best options available.

What Is a Children’s Bank Account?

A child’s bank account mirrors that of an adult, with a few alterations. Designed for those under the age of 18, they are usually opened either by or with the help of a parent or guardian. Children’s accounts typically come with no or minimal fees and charges, have a withdrawal limit, and give them basic access to digital banking tools like apps and transfers. This offers hands-on education to help kids develop good financial habits (and feel some independence) while giving parents or guardians the opportunity to supervise and steer.

Savings vs. current accounts
Children’s accounts usually fall into two categories. They can have a current account, designed for spending and everyday use. These usually come with a debit card. Most banks also offer a children's savings account, with a higher interest rate. These are designed to encourage young people to build up their money longer-term.

Savings accounts can usually be opened for children of any age, while current accounts typically have a lower age limit.

Key Features to Look For

When opening an account for your child, the important things to look out for include the level of control and monitoring you want the adult to have, the interest rates, and any fees or limitations imposed on the account.

• Parental controls and monitoring – some accounts require the named guardian’s signature for certain withdrawals, or may have to give approval for certain amounts. Others may allow the guardian to set a withdrawal limit themselves. The named guardian may be able to opt in to receive notifications when a withdrawal is made, or have access to the transaction history of the account. They may also have the option to freeze the account or debit card.
• Interest rates and savings benefits – typically current accounts will offer little or no interest rates as they are designed for everyday spending. However some may offer interest as an incentive to save money. Child’s savings accounts typically offer a higher rate of interest, although this will be lower than long-term savings accounts like bonds or no-access accounts.
• Fees and account limitations – while there are usually no fees to open and hold a children’s bank account, there are some other potential fees and limits to be aware of. Some banks may charge a small fee if a debit card is lost, for example. Typically a kid’s account won’t charge overdraft fees, but instead would ensure the child can’t go overdrawn instead. Other limitations could include withdrawal frequencies and amounts, and age restrictions.
• Educational tools – some accounts will come with resources to help children and adults track spending and saving, and to discuss financial goals. They may also come with apps to help teach kids about budgeting and responsible spending.

How to Open a Children’s Bank Account

Age Requirements and Eligibility
The child you’re opening the account for should be under 18, although some banks specify a lower age limit. As a parent or guardian, you need to be over 18 and a UK resident.

What Documents Do You Need?
Typically, you’ll need a form of ID and proof of address for the parent or guardian, plus the passport or birth certificate of the child.

What is The Process?
To open a children’s bank account, you can either visit a branch in-person or apply online. If applying online, fill in the form and provide the required documentation. If applying in-person, go to the bank along with the child you wish to open the account for. Bring your documents with you – the staff will talk you through the process.

The Top 3 Children’s Bank Accounts
Most well-known banks have options for children to open an account. These banks are the largest in the UK, and all offer accounts for young people.

HSBC offers a current account (complete with debit card) with a withdrawal limit of up to £100 a day. It automatically comes with a savings account that has an interest rate of 5.00% AER/4.89% gross on balances up to £3,000. Kids will have access to the HSBC app to help manage their money, and need to be between the ages of 11-17 to apply.

A Lloyds child account can be opened from age 11-15 and held until they turn 18. It also comes with a savings account (interest varies from 2.85% AER/2.81% gross to 1.15% AER/1.14% gross depending on how much is in the account). Lloyds states that you get oversight of the child’s account, plus spend notifications, through their mobile app.

To open a child account at NatWest, the child must be between 11-15 years old. The account comes with an interest rate of 2.35% AER/2.33% gross, and money can be withdrawn or spent using either a cash card, debit card or a smartphone. Plus, if they think they’ve lost their card, they have the ability to freeze and unfreeze their card too.

Teaching Children Financial Responsibility

Opening a children’s bank account is the first step in teaching kids about financial responsibility. So, what’s next?

1. Set savings goals – encourage children to set goals for their savings. This could be an amount they’d like to get to, something they want to buy or some spending money for an upcoming trip.
2. Budgeting tips – show children how to divide up their money into spending and saving allowances. You could encourage them to track their spending and identify ways they can save, or even set them real-life tasks when you go shopping together.
3. Encouraging smart spending habits – ensure overspending isn’t an option so they can learn responsibility. Prepaid credit cards and gift cards, with their fixed limits, can help kids stick to an amount and teach smart spending.