To ask for your opinion on kids bank accounts?

[Cardiffclare88]

I'd like to open an account for my newborn DD, what recommendations do you have? Obviously for savings but what should I look for? Would like her to have access when she's a teen.

I would put money aside that I could hand over when needed rather than an account which would just swap to their name at 18, only because when I was 18 I would have spent it on rubbish whereas after uni when actually having to live independently it would have made a huge difference!

My kids pre-date Child Trusts. I opened a Building Society account for each of them. I also bought them premium bonds and they do have wins from time to time. The BS was taken over, merged, taken over again and the account paid virtually nothing so when DD1 was 16, I showed her Martin Lewis' article on ISAs and said I'd help her open it. She chose one and we closed the BS account and put it all in there. She is at uni but has no intention of using it other than for a house deposit.

Some youngsters can be responsible, but I liked the idea of me having control of the BS account until I chose to sign it over, rather than it reverting at a birthday long in the future when I would have no idea how they might behave.

I don’t really have one or want one for the kids. They can set one up when they are older for themselves, like when they get a or job at 15/16. but I just feel that they have more toys and sweets and treats than is good for them already and we will always make sure they have what they need and will put them through university and probably give them all a house deposit. A bank account is just more bloody admin for me and access to money they don’t need for them.

@purplepinkpurple

They are bonds, issued by the Government. Every £1 you invest is put in to a draw (like a giant raffle, or lottery) every month and you have the chance of winning a million, but there are also lots and lots of smaller prizes - hence the £50 and £25.
One you've bought them, they go into every draw until you sell them. Then you get your money back. You don't have to buy them for every draw like the lottery.
Statistically, I read that if you have invested the greatest amount you are allowed (I think it is about £35 000) then you are statistically likely to earn as much in winnings that it would beat any savings account at the moment. Of course, you might win the million, or, like me, you might have held a bond since your Christening in the early 1960s and never win a sausage
That said, my dc all have about £300 worth and 1 has won both £50 and £25 and both the others have also won - one x £25 and one x £50. When they need the money, they can sell them and get the £300 back.
Website

but I just feel that they have more toys and sweets and treats than is good for them already - I don't see your logic, surely if they have more toys, sweets and treats than is good for them already then it would be a good idea to have a savings account so that they can see their birthday money/pocket money or whatever build up and it will (hopefully) lead to a life long savings habit?

My DS (now 17) has always had a savings account and is proud of the fact that he saves most of his birthday/Christmas gifts (he tends to be given money rather than actual presents by relatives), he has been able to buy himself a playstation and other 'expensive' gadgets that we would just not willingly go out and buy for him. He has opened additional accounts himself for his part time job and does on line banking etc. He has become quite proficient at budgeting and buying and selling on DeBop - or whatever it's called. I've never been expected to fork out for expensive trainers or mobile phones that you see other mumsnetters feeling 'obliged' to buy for their teenagers.

I believe it's never too early to have a savings account and to learn about budgeting etc.

But to answer the original question, most Banks and Building Societies offer special savings accounts for children, just enquire with your own Bank.

For anything long-term (I.e access at 18) you need to look at options other than cash as inflation is a risk. I’ve got a junior stocks and shares ISA for my child and I put in gifts and a small monthly contribution. When she’s a bit bigger I’ll also open a bank/savings account for her so she can save some of her birthday money and/or pocket money and start to learn how to save and budget. At the moment, she’s only a toddler so it’s all going in the long-term account and she doesn’t get a choice in the matter.

I really strongly believe that children need to learn to manage money in small steps.

Save it in a separate account in your name.

I’m just about to open savings accounts for my 7yr olds with HSBC - easy access and ok interest rate. This converts to current account with debit card at 11yrs. This is just for birthday/Christmas money etc - so relatively small amounts.

Both I and my mum save for them monthly into accounts held in my name so I can decide when the money becomes theirs (possibly never!) - stocks and shares would give higher returns but I haven’t had time to research this properly so the money is currently with Nationwide as they have good savings rate (switched from Halifax as their rates dropped)

Look at Moneysavingsexpert (MSE) website for best rates and recommendations

We have a nationwide future saver for our son. Accessible at any time (both my husband and I are joint account holders on his behalf) so if he gets to 16/17 and wants to buy/insure a moped/car, he can but equally unlike a junior ISA it doesn't automatically become his money at 18, we can sign it over into his name whenever we like from the age of 11 so it could be done at 18, 21 or when he's 50

If you want to get the most interest saving in your own name isn't the best way to do it. Children's accounts pay better interest.

All you need to do is go on MSE and pick the highest interest account. Open and operate it online and you don't need to tell the child about it, you can keep control of the money

Yesterday I went with my 15 year old son to open a virgin savers account just so we can go and access the free drinks, bowling alley, pool table, air hockey etc at virgin, interest rate was ok too

I save £30 a month for each of my dc. I increase every time I have a pay rise. It does mount up quickly. I love the idea of them using it to travel or for uni fees.

Agree with Patti - childrens' accounts have better interest rates and if you are a tax payer you will be charged tax on the interest if you keep the account in your own name. You don't need to tell your child about the account for ages - we certainly didn't inform our new born son when we opened his account - we also started a pension for him, that's a brilliant way to provide for your child's future if you can.

@Ragwort, how did you start a pension for your DS?

The other thing to be aware of is if you earn more than £100 in interest and the money is from parents (think it is per parent) it is effectively taxed at the parent’s rate unless it is in an ISA.

I too agree with Patti, but most accounts, including ISAs, become the child’s on their 18th birthday, regardless of whether or not you tell them about it! The institution just writes a letter direct to them with the account details in, and if online, cuts off the parental login!

Maybe the Nationwide future saver is different, but having got 2 young adults, no other accounts that they have had (including stocks and shares ISAs) have allowed a parent to manage the account past the 18th birthday.

My view is to save in their name and gradually allow them to know about/manage the money in their teens. If saving into a S&S ISA, get them involved with investment choices as they approach their 18th.

My two already had a pot of money saved by us, when they unexpectedly got a large (almost 6 figure) inheritance at 15 and 18. It could have been a recipe for disaster, DS receiving that much in his name only weeks after turning 18, but sensible discussion about house deposits, not wasting it, drip feeding it into ISA (and letting him and subsequently his sister have involvement in fund selection) has paid off. Neither are remotely interested in wasting the money and indeed are keen to add to it. If anything, it has helped with their interest in savings, budgeting etc, rather then making them want to blow it all!

They have both had cars, but re paid the money into their inheritance pots from their part time jobs.

For those saving in your own name, think about what happens if you die. It will become part of your estate, plus may end up with your other half and the DC may never see it. There are so many stories around about second marriages and money going to subsequent spouses, that it is worth considering what is written in your will in respect to the ‘child’ accounts.

There was a thread on this recently.
I have done the same as your plans and found an ISA that works well. We are happy!

www.mumsnet.com/Talk/am_i_being_unreasonable/3467231-I-probably-am-bu-and-very-nosey-but

Cardiff - we have a financial adviser and he sorted it out for us, it is fairly straightforward to open a pension plan for a child, I imagine there is advice on the Martin Lewis website.

@Cardiffclare88
We have opened a pension account for DD too, it's with Hargreaves Lansdown. We contribute a small monthly sum to this in addition to what we put in her Junior Stocks & Shares ISA. I wouldn't only save into a pension as it's only accessible when they reach retirement, but starting one off early (if you can afford to) is a great thing to be able to do for them as they will benefit from the compound interest over many years.

We have one for DD with Santander.

We put all the money she receives for birthday and christmas into it as well as the odd bits grandparents and great-grandparents have given her.

She doesn't know about it and we won't be telling her. We'd like to save it until she's done with uni (if she goes) so that she has a good little savings pot for finding somewhere to live and getting started on her own (whether that's a house deposit or for renting near a job).

My daughter had a bank account linked to mine till she was 11 and she could have her own. I think it is good learning about financial planning etc

Save for her but save in your name. Giving a teenager open access to a lot of cash is asking for trouble. How will you feel if she squanders it all away at 18 and didn't spend it on uni, car, training, edging etc?

If money is in your name then you can choose what it gets spent on with your dd.

We save for ours, I want them to have a good start in their adult life when they need it.

They have separate accounts for their allowance. They are free to use that and any birthday/Christmas money as they please.