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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Borrowing child’s savings...

470 replies

Quckname · 12/09/2021 12:02

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

OP posts:
CockSpadget · 12/09/2021 18:58

@Chesneyhawkes1

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"
Sad that happened to you, your Dad is an arse for doing that,but this is a completely different situation. That money was giving to you by another person, this money was put there by the person who wants (needs) to now use it.
Slippy78 · 12/09/2021 18:58

@BlackTee40

It's still the parents money at this stage imo. Yanbu.
Your opinion isn't relevant. The law says that it belongs to the child.
Whattheschitt · 12/09/2021 19:09

@Elouera

3-4yrs to pay off!!! Shock

The parent should speak to a debt advisor and get professional help to sort their mess out!

A debt advisor would advise them to use the savings.
CurzonDax · 12/09/2021 19:10

YANBU

The money was saved with the purpose of benefitting the child in their future.

Right now, the child will benefit from living in a home that is debt-free and parents aren't stressing and worrying each month about how to pay it off.

SE13Mummy · 12/09/2021 19:11

To me, what the parent is considering amounts to a reallocation of funds they'd earmarked for their child but don't currently belong to the child. If the parent is now more financially literate, it makes a lot of sense for the allocated-as-child's-savings money to be redirected to clear the debt. If the parent feels it's important to replace that money before starting to save again, so be it although I'd encourage them to think carefully about how important it is for the child to be given it as a lump sum at 18/whenever vs being used to residential school trip to New York, to buy a harp or top of the range sports equipment.

If the parent isn't financially literate, I'd encourage them to look into a course, budgeting sessions or to see if it's possible to get some mentoring from an organisation along the lines of CAP to support with managing the family money.

FWIW, I never had savings growing up and neither did my parents. There wasn't any spare money and although they both had professional jobs and were extremely careful with finances, finding 20p per week pocket money for the three of us was often hard thanks to the wider impact of the Black Monday crash in 1987. The fear of losing our home was very real and hung over us for years. If my siblings or I had had any money, we'd have definitely wanted it used to alleviate that. I think it's made me very cautious about money and wanting to be able to access enough in an emergency situation.

SleepingStandingUp · 12/09/2021 19:30

@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.
You know banks charge interest right? At far higher than the kids savings account accrues interest. So she borrows £1k from DD, pays back £1.2k She borrows £1k from bank, she pays back £1.6k.

Do you not see that it's better for DD to see that. 4k in the family budget not that banks back pocket?

fuzzymoomin · 12/09/2021 19:30

YANBU at all. I would use it and not even bother with the interest when I saved again. It's not your child's money is it. It's your money that you have saved in an account with the hope that your child can benefit from it when they are old enough. Right now, it's more important to clear your debt.

Happyfeet1972 · 12/09/2021 19:35

If that's money you've put aside for your child and they don't know about it then I'd say its fine to use it. It's the equivalent of having £500 put aside for a holiday and then something happens to your boiler and you need it for that.
It makes complete financial sense to not pay a high interest rate if you can avoid it and if you can save paying the interest , you'll presumably have more money to put aside for your child in the long run. I dont see that as stealing.

If the child does know about the money then that's a bit different but arguably they will still benefit more if you save the interest.

If the money had come from someone else it would absolutely be stealing but that's not the case here

Rainy1252 · 12/09/2021 19:49

The law says that it belongs to the child.

slippy78

You’d better let the banks know.

There are many child accounts that parents can set up and parents can withdraw money from at any stage. Of course there are some that you can’t (junior isa for example) but OP must know she has an account she is legally allowed to withdraw from.

MillicentBystander101 · 12/09/2021 19:52

That isn't correct, though @Slippy78 otherwise dwp wouldn't be able to tell you that you have to use your children's savings, if they take you over what you're allowed on UC. The savings are accessible, not in an ISA.

CanIPleaseHaveOne · 12/09/2021 19:54

Terrible writing - please excuse!

caringcarer · 12/09/2021 19:58

Once you put money into child's account it belongs to your child. It is wrong to take it out for your own debts. As the parent you should be protecting your child's savings not plundering the account. What if you take the money to pay off your debt and then something unforseen happens, like becoming unemployed, and you can't repay the money? In my view it is stealing from your child, even if you have intension of repayment a long way down the line. You should only give away what you can afford.

GettingItOutThere · 12/09/2021 20:01

if YOU have put the money in (and only you!), use it.

if other people had i would say YABU, not as its YOUR money, borrow it!

caringcarer · 12/09/2021 20:05

Have you taken advice from debt charity first? Have you tried to get an alternative credit card with interest free period?

AccidentallyOnPurpose · 12/09/2021 20:05

@caringcarer

Once you put money into child's account it belongs to your child. It is wrong to take it out for your own debts. As the parent you should be protecting your child's savings not plundering the account. What if you take the money to pay off your debt and then something unforseen happens, like becoming unemployed, and you can't repay the money? In my view it is stealing from your child, even if you have intension of repayment a long way down the line. You should only give away what you can afford.
She'd probably be in less debt if she never put that money in the account.
ancientgran · 12/09/2021 20:11

@PileOfBooks

Why are you putting money into childs savings when you have so much debt!?
This. You can't afford to save for a child if you are in debt. Pay off the debt and then save for the child.
Hyppogriff · 12/09/2021 20:11

It’s not right.if there’s no other choice there’s no other choice . But the parent May be kidding themselves that they are going to pay back with interest given their poor financial choices to date …

MurielSpriggs · 12/09/2021 20:16

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.

You know banks charge interest right? At far higher than the kids savings account accrues interest.
So she borrows £1k from DD, pays back £1.2k
She borrows £1k from bank, she pays back £1.6k.

Do you not see that it's better for DD to see that. 4k in the family budget not that banks back pocket?

Hi @SleepingStandingUp

Yes, I can see what you mean.

But the parent doesn't have the option of borrowing from the bank. They said so in the first post. Why not? In your example the bank could make £600 for doing pretty much nothing. There is a reason why a commercial organisation which is geared up to make as much money as it can for its shareholders by lending money recoils from this easy money. Because it isn't easy money. They don't think they'll get it back.

Tupla · 12/09/2021 20:16

What if you take the money to pay off your debt and then something unforseen happens, like becoming unemployed, and you can't repay the money?

What if they don't take the money and are suddenly unemployed? They'd be in an even worse position, with masses of debt and no way to ever pay it off.

CockSpadget · 12/09/2021 20:21

@MurielSpriggs

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.

You know banks charge interest right? At far higher than the kids savings account accrues interest.
So she borrows £1k from DD, pays back £1.2k
She borrows £1k from bank, she pays back £1.6k.

Do you not see that it's better for DD to see that. 4k in the family budget not that banks back pocket?

Hi @SleepingStandingUp

Yes, I can see what you mean.

But the parent doesn't have the option of borrowing from the bank. They said so in the first post. Why not? In your example the bank could make £600 for doing pretty much nothing. There is a reason why a commercial organisation which is geared up to make as much money as it can for its shareholders by lending money recoils from this easy money. Because it isn't easy money. They don't think they'll get it back.

No, they never said they didn't have the option of borrowing from a bank, they said they couldn't borrow at a LOWER RATE
Rainy1252 · 12/09/2021 20:23

@Tupla

What if you take the money to pay off your debt and then something unforseen happens, like becoming unemployed, and you can't repay the money?

What if they don't take the money and are suddenly unemployed? They'd be in an even worse position, with masses of debt and no way to ever pay it off.

And wouldn’t be entitled to Universal Credit either (or a reduced amount anyway) with the numbers OP has alluded to. Because guess what! DWP would expect OP to use these savings as they are legally accessible to her. And they wouldn’t care if £10k of that money came from a grandparent either. (Random example but hopefully people get the gist).

I don’t know if Martin Lewis has ever answered a question like this, but I would put money on that he would say to use this money (OPs money saved aside for her child) first to clear the debt, then continue saving for the child once affordable.and actually probably not until she’s built up some savings for herself first.

Islamorada · 12/09/2021 20:27

You put the money in so you can borrow and pay it back. My advise is not get into debt again. Have a savings plan to pay back quickly.

Emimummy · 12/09/2021 20:32

Yes borrow the money, it was you who put it there. My 1 year old daughter has a savings account that we set up for her and only we have contributed all the money in there. We have full access to it and said if god forbid anything happens that means we can't pay the mortgage to keep a roof over her head we would absolutely use the money.

theemmadilemma · 12/09/2021 21:11

Do it. You paid it in, your lives will benefit you taking it back at this point in time.

Autumngoldleaf · 12/09/2021 21:19

Omg take the savings.

They are a bonus conferred by the parent its not taking form anywhere else.
But parent must save again for children... Even five a month, they must put something in and preferably stocks and shares isa