Borrowing child’s savings...

[Quckname]

Do you think the following is acceptable?

Parent has some expensive debt on credit cards. The interest free period is expiring and the parent is not able to get a loan or balance transfer to a lower rate.

Child has an instant access savings account with some money in.

Is it ok for the parent to borrow funds from the child to repay the expensive debt, as long as they ensure that the savings are repaid (with interest) before the child would have used the account?

So as not to drip feed:

• money in the savings account was paid in by the same parent (not friends & family)
  
• money would be repaid along with the compound interest that it would have accrued in savings
  
• repaying to the child’s savings would take approx 3 - 4 years, compared to it taking 20 years plus to repay on the credit cards with high interest
  
• child is still young so not due to receive the savings for a long time
  
• the child has not been asked for their opinion because they are too young (and too generous) to make an informed decision
  
• parent has explored and exhausted all other options to reduce the cost of borrowing
  
• if paid off, the credit accounts will be shut down so that it is not possible to accrue large debt again
  

What do you think?

YABU - borrowing the money is the same as stealing, the parent shouldn’t touch the child’s savings and should repay their debt over the longer period of time at the high interest rate.

YANBU - the money will be repaid to the child’s savings, and the child will benefit from having a parent that is not stuck in long term expensive debt

[RonniePickering]

It doesn’t sit well with me personally, but if you can guarantee it’s paid back I suppose needs must.

[CreamFirstThenJamOnTop]

It’s not ideal but if absolutely necessary then it’s ok.

[seaandsandcastles]

YABU. It is stealing, the money isn’t yours and in all likelihood even with the best of intentions the money won’t be paid back.

[Cocomarine]

If the money was paid in by that parent - as you say - then I say morally yes without needing all the “pay it back with interest” stuff. Although that’s a great thing to do.

[Biker47]

I mean, if you're able to accrue such a large amount of credit card debt that it would take 20 years to pay off, what's there stopping the temptation in generating even more debt when you've got a nice clean empty card?

[TakeYourFinalPosition]

parent has explored and exhausted all other options to reduce the cost of borrowing

If the parents financial situation is that bad, I’m not sure that it’s possible to say it’ll definitely be paid back. I appreciate parent is intending to pay it back, but that doesn’t match any of the financial information given in the post…

I think most people who borrow more to pay off debt; whether from banks or family or children etc have the strong intention and belief that they’ll be able to pay it off and it benefits everyone, as a mental crutch to make it seem like a good decision for everyone.

I think you have to make the decision based on not being able to pay it back, if finances are as bad as you say, and if you can, it’s a bonus.

If there’s another viable option, I’d leave the savings alone.

[ManifestDestinee]

YANBU. You put the money in, it's your money.

Anyone saying its stealing and you shouldn't is daft AF. Should you be stuck in debt for years, taking money that could benefit your child, just so randoms online don't call you a theif? Fuck that.
The right thing to do for your kid is sort your finances out. Borrow the money, put it back later.

[ChristmasCocktail]

No. Because you've already managed to get yourself into debt you can't pay off quickly.
How would you know you would manage the temptation in future? Leave the kids money alone.

[Cocomarine]

I’m curious as to why a parent who had so much high interest debt was making the poor financial decision in the first place, of saving for a child instead of paying off their debt. That lack of sensible financial decision making would make me wonder about the parent re-building the savings.

[Biker47]

Also, life and situations can change, even if you don't go mad and generate the debt again yourself, a job loss or an unforeseen illness could wipe out any possibility of realistically repaying the money.

[Lockheart]

If a family is in severe financial crisis then the whole of the families assets need to be looked at. It's no good for a child having a parent who can't afford to feed themselves or put the heating on or who can't pay the rent / mortgage. Fuck all point having several hundred pounds sitting untouched in an account when you're all freezing / homeless.

So it depends how badly this debt would impact the family really.

If it wouldn't impact much, I would leave it alone.

[MayorGoodwaysChicken]

Realistically how likely are you to pay it back? If you can hand on heart say you have changed your spending habits and won’t run up debt again then it may be in the child’s interests to have more financially secure parents.

For me I think the key factor is that you saved the money for them. If it had come from other people then no way, it’s clear cut stealing. But if you saved that money then even if it’s currently in an account in the child’s name, I don’t think it’s that bad to use it for something else. As the child is so young I think the money is kind of still yours in a way….but if even a penny was given from someone else then in my book it’s untouchable.

[Aroundtheworldin80moves]

In the long run, the child will benefit from their parent not being in debt.

However parent should also be careful not to get into more debt.

[driftcompatible]

It's stealing. And if you've got into this much debt that you need to take from your child then I highly doubt you'll commit to paying the child back. Your debt isn't their responsibility.

[BeagleMomma]

No.

My parents used £3000 to clear off debt that my grandma had saved for me. Never got it back.

Whereas when my brother got to 18 his was still intact and he got it all.

I've never quite forgiven them.

[Akire]

I think it’s fine, you can pay it back and even if you couldn’t child will not know any difference. What’s alternative leave kids money alone yet pay huge sums interest a year extra and knock on affect on household budget for no other good reason as to not “steal” something you are going give back.

Yes child reason why we didn’t have heating on in 2021 and ate beans on toast was that I was paying £150 month interest on credit card that I could paid off by borrowing some money that I gave you in first place. Which you couldn’t spent 10years anyway.

[SuperbLyrebird]

YABU. It is stealing

Oh don't be daft.

Do it, OP. You're the parent and I'm sure you'll do the best for your DC.

[PileOfBooks]

Why are you putting money into childs savings when you have so much debt!?

[Whitefire]

It is the responsible thing to do, a 20 year debt is going to have much more of a day to day effect on the child.

Though if one is talking about a debt that is so large that it will take 20 years to pay off, I think having proper debt/ money advice is a must. (Stepchange, Christians Against Poverty)

[Rememberallball]

Will parent be cutting up credit card and not loading another one up with debt once the current balance is paid off? I would worry that, once cleared, the temptation to use the card again would outweigh the responsibility to repay the child as they wouldn’t know how much had been taken (op says child is too young) and the ‘too generous’ comment would then be used to justify not recouping the loss.

[Whatadolt]

Personally I think if you need to pay the debt and the child is young and it will be returned I see no problem.
Only on MN will you get PPs saying it stealing.
The child when older would say they wish you had paid the debt so that they could still have the life they have
and not let the parents struggle.

[MayorGoodwaysChicken]

@BeagleMomma

No.

My parents used £3000 to clear off debt that my grandma had saved for me. Never got it back.

Whereas when my brother got to 18 his was still intact and he got it all.

I've never quite forgiven them.

But that’s a totally different situation to this. So different that it’s basically not relevant. What happened to you was awful but that’s just not comparable to this situation!

[TrifleCat]

I’m wondering if those who have said don’t pay the debt have lived through the crushing relentlessness of being in debt ?

Pay the debt off OP and repay the savings monthly.

If I was Martin Lewis this is exactly what I would be advising you to do. It makes financial sense , and will make your family life a lot happier day to day.

[PileOfBooks]

And most children surely wont have "savings" to speak of. And this wasnt bequeathed by anyone. Is the child even aware?

[IveGotASongThatllGetOnYNerves]

YANBU.
circumstances change.
The parent put their money into an account with the intention of eventually giving a lump sum. They will still be giving that lump sum. I don't see the issue

My parents started a savings account for my children when they were born. Some years later they got into a serious financial mess and I told them use that money. It's stupid to be struggling while you have a pot of cash you wanted to give away years in the future.

I see it differently to most posters I think. It's a savings pot that you're putting into with a specific aim in mind. It doesn't mean you can't re-evaluate if things change.
Oh my boiler packed up and we've no heating or hot water but I can't use the £5grand I've got saved up for when my 5 year old turns 21. 🙄