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

It's still the parents money at this stage imo. Yanbu.

So, the OP is clearly under financial pressure and will continue to be as long as she services her high interest debt. Do people really think it's in the interests of her child for family income that could otherwise benefit the child day to day, to be squandered on high interest payments that could be avoided? The better off the OP is, the better off her dependent child is. Fact is, OP, with the best intentions, put aside money for her child she didn't have, as she was using CCs to fund her other expenses. Truly some of these responses are bizarre.

@CecilyP

The money was a gift to your child so it is theirs; we don't claim gifts back.

Another way of looking at it is that it wasn’t OP’s gift to give in the first place; it was the banks! And now the bank want it back and with a high rate of interest.

This is very true.

If you're confident you can pay it back i can't see the issue. It isn't stealing, it's borrowing. The person you're borrowing for isn't old enough to make informed decisions so that is the kinda decision a parent could help them make. You're a family and sometimes you need to move money around if that is what is best and needed at the time. Paying so much in interest is such a waste when there is another option.

I don't understand why this is even a question.

A colleague who had a beautiful house in the country and I assumed was very wealthy told me in passing that they bought the dc's Christmas presents out of their own savings that was given by grandparents/wider family (and it wasn't paid back). I was initially a bit aghast and she could obviously tell, and just said she felt it was less damaging to the children to do this rather than them getting into debt. When she said it like that it made sense.

@BlackTee40

It's still the parents money at this stage imo. Yanbu.

It's not though, is it. It's been deposited into the child's account as a gift. It's now officially the child's money.

If youd been gifted £2000 then someone told you 3 years down the line they wanted it back you wouldn't say "oh yeah it's still your money".

It would be a no brainer for me OP.

You're going to pay it back before she needs it. Her life will be better off if her parent isn't struggling for money every month/wasting it on credit interest.

The money hasn't been gifted to the child yet. They are not given access to it or allowed to spend it. It has been put aside with the intention of giving it to them in the future. Unfortunately sometimes circumstances arise where intended actions cannot be carried out. This is one of them.

It's a no-brainer to me.

You've put money into savings for your child for when they're older. It isn't like you've handed it over for them to do with what they want. So if them money is NEEDED then it's needed. Clearing this debt counts as NEEDED.

If you put £100 in the Xmas pot each month for presents and the boiler breaks in Sept costing £600 you don't sit and freeze then spend £1k+ in kids toys!

It’s the parents money at this point in time. It hasn’t been gifted to the child, the child does not even know they have money. At this point, all the child’s needs are met by the parents.
I don’t know how a parent will be so neck deep in debt that rather than paying it up, they are prioritising saving for a child.

A friend of mine had to use her child’s saving (saved by her) to pay the stamp duty etc when they were buying a house. They were going to be stuck in a small flat otherwise and having a house has benefited the child as she now has her own room, garden, play things in the garden etc. She’s so much happier.
They’ve just started saving again for her and I don’t blame the mum at all .

Bearing in mind that the money (I assume all) was paid in by the parent:

Yes, if we are talking eg a 7 year old and/or they don't even know the money is there. Even with the bank book in their name, I'd see the money as legally yours to spend until the time when you hand it over. After all, you are spending many thousands every year providing a home, meals etc. which this is going towards. You should feel very guilty (but maybe it's still necessary) if the debt was built up on round the world cruises and luxury items.

No, if we are talking about a teenager. The argument above probably still stands, but if they ever found out, it would absolutely destroy the relationship.

Surely the over all financial health of the family is the higest priorty here. The money you put aside is your money that ear marked for that purpose. It would be crazy to have debt in one area in that sitting there.

Did you ever read Mr. Money Mustache? I came across the site quite a few years ago. My understanding of finances, relationship to money, and financial health changed utterly, and very much for the better. The site is American but the principles are applicable anywhere.

Good luck OP.

I don't know. Reading the op, though, there's a hell of a long history of financial mismanagement. It's not just a blip due to unexpected life events. It'd be more realistic to accept repayment may not be possible.
But you're missing the historical bit.
Say 10 years ago op got into financial issues. Whilst paying off the minimum debt and accruing interest she was also putting say £100 pm into her kids account.

A few years later so wised up, got interest free cards and started clearing actual debt at say £100 pm - 60% of the total up to now, but she also kept saving for her kid.

Sensibly she'd have stopped saving and pushed all money towards the debt, meaning the kid might have nothing now anyway.

Now the debt will start accruing again due to no 0% she's using the money she should have used years ago in one block to clear it.

The debt is say £6k and the kid had £10k so there's £4 left.
OP can afford to keep paying £100pm to her credit card but this will go to her kids account instead to cover the £6k plus interest, as well as maintaining the £100pm in building up the savings.

We almost had to use some of our sons savings for a car deposit when mine was written off and needed a car urgently (DC disabled) and the insurance pay out was taking forever.

We justified it to ourselves by being able to replace the amount in full when the payment came through and with it being a good enough reason to justify it should he ever ask why there was a withdrawal in the future.

Fortunately it wasnt required in the end.

@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.

This!

Nothing erodes a family budget as pointlessly as debt interest

I've changed my mind, I thought this was money your child had been given by other people not yourself. Totally understand if this is what you have saved and now need to use. It's unfortunate, but that's life. You're child doesn't need a mum who is constantly worried about debt hanging over her head. It's a hitch, pay the debt, and start putting aside savings when you can.

YANBU. If you've paid it in, you can take it out. The child doesn't need it yet but the debt needs servicing.

Pay it back when you can.

@KingdomScrolls

If you've moved from interest free card to interest free card already and you're now in a much better financial position with a much better income, why can't you do that again?

It incurs a few to do so!

I didn't vote, because I don't agree with either option, but why can't the parent borrow from a bank? Presumably because they're a bad credit risk and can't be trusted to pay the money back. It's not fair to expect a child to take a risk with it's own money that a commercial lender wouldn't.

The money you have saved is your money on behalf of the child. It's not their money until 16/18 (whatever it is). I would 100% not hesitate in borrowing the money. Sounds like it will benefit your child financial also through the decrease in paying interest. Do what is right for your family

@MurielSpriggs

I didn't vote, because I don't agree with either option, but why can't the parent borrow from a bank? Presumably because they're a bad credit risk and can't be trusted to pay the money back. It's not fair to expect a child to take a risk with it's own money that a commercial lender wouldn't.

If you read the what the OP has said, you would know that she can borrow from financial institutions. The issue is that she has quite smartly had her debt on 0% deals, which have ended, and her debt will now incur a lot of interest. Savings currently do not gain interest, so the sensible thing to do would be to use the non interest gaining savings to pay the interest accruing debt.

@MurielSpriggs

I didn't vote, because I don't agree with either option, but why can't the parent borrow from a bank? Presumably because they're a bad credit risk and can't be trusted to pay the money back. It's not fair to expect a child to take a risk with it's own money that a commercial lender wouldn't.

And there speaks someone who knows FUCK ALL.

It's a tough one. My Dad used money my Granddad left me to buy himself a new car. I never got it back. Neither did my brother, who's money he also "borrowed"

And @MurielSpriggs don't you think it's more risky for the child to be in a household made unstable by debt? The child is not taking any risk, they are lucky to have a parent that has saved for them in the first place, there are many who go without far more than a but if savings.