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

OP, borrow the money, pay off your debt and set up a standing order in an affordable amount to child's account each month-it may take several years but you'll soon pay DC back and then some.

It is completely fine to take the money from the savings account. For god sakes. Savings are making absolutely nothing at the moment and paying interest makes zero sense. Putting the household into a precarious economic position while there is money to use seems nonsensical.

My parents never gave us a savings account because they couldn’t afford it when we were children. They have been very generous in adulthood as they have much more secure income. Circumstances change. That is the nature of life. Give yourself a break.

Morally it doesn't sit right with me, but if you do take it then you need to repay it into a junior ISA or similar that you can't access.

Well, unless your child has less than £3000 or their money is in a junior ISA, their savings affect universal credit entitlement, and you are expected to use their savings. If that isn't stealing, neither is this, OP. At least you'll be paying it back.

YANBU. The child needs solvent parents, and you have to do what ever necessary to put a roof over their head and food on the table. Everything else is secondary.

Just bear in mind that some parents find it very hard to reimburse the money in to the child’s account, as they always find a need for the money. And sometimes the money never gets reimbursed.

It’s stealing and, let’s face it, you’re very unlikely to pay it back given the background! It doesn’t sound like there will be any other money available to support your child as they start life as a young adult, so let them keep this.

If the parent has accrued that much debt and is unable to finance it properly I would not be believing for one minute that they will definitely put the money back later.

You put the money in the account so I think it’s absolutely fine to use it to improve your and your child’s life. Having debt is stressful don’t have debt if you don’t need to

@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.

If you put the money in then it's your money, not the child's.

Furthermore it is ridiculous for a parent to struggle financially which will have a detrimental impact on a young child whilst there is money in an account that can be used to resolve the issues. The parent has full intention of paying it back.

If the money had been gifted by another family member or was from life insurance or inheritance then that's a bit different.

I think it’d be fine but only if you can pay back and plan to set up regular affordable payments to pay back .
You don’t get into any debt that you can’t afford again only then would i think it fine . If you can’t do this then yes it would be unreasonable.

I have done it - but I made sure that the entire amount plus compound interest was paid back, as the OP intends to do. I was in dire straits and my children would have suffered without it. It didn't go on a holiday or a new car - it was all on day to day living.

@Loopylobes

I'd borrrow the savings to clear the debt and then, if possible, get a loan at a sensible interest rate to pay the savings back.

This is one of the most stupid things I have ever read on here.

It's stealing.

If it was stealing, it’s theft, which is a legal thing. If it were illegal, it wouldn’t be possible for the adult who set up the account to take money for it. It would be protected by the bank’s own systems.

It’s not ideal, you may think it immoral, but it isn’t stealing.

@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.

Its unclear, was the£3000 paid to clear their own debt?

In which case your parents owe you that money + compound interest and I would be asking for it paid back.

It wasn't theirs to take.

Why all the digs about OP's ability to to repay? A lot of judgmental people on here! I was 18 when I had my first dc and was unbelievably shit with financial responsibility (ADHD) in my 30s now and I have learnt my lesson, matured a lot and am almost debt free and on track to buying a house.

Accruing debt when you're young doesn't define you as an irresponsible spender for the rest of your life!

A family works as a team for the communal good. So use it if absolutely essential, and return it as soon as possible.

@Quckname

I had DC when I was quite young. In my naivety I believed that I should always be putting DC first and desperately wanted them to have something for when they are older, even if I couldn’t really afford it. My initial way of viewing the finances wasn’t wise, but this was quite some time ago and I have learnt / matured / adapted since.

DC is top end of primary age, so not tiny toddler, but not due to withdraw the money any time soon. I’ve been more realistic with money in recent years, this is just an old problem that is still chasing me.

OP take the money out and pay off your debt. It's not like you are taking the money to buy a flash car or go on a fancy holiday. This will benefit DD in the long run.

Anyone on this thread who says it is stealing has clearly never dealt with financial issues or came from a background where money wasn't plentiful.

We have had a lot of money issues over the past few years which resulted in us using any money that was gifted at birthdays and Xmas and not putting it into a savings account for kids when older.

We have finally gotten ourselves into a situation where we are debt free, no car loan and own a house. The kids are reaping the rewards as it's never an issue if they need new clothes or shoes and go to lots of activities. We have a good life insurance policy, private health AND we have started saving for their future. We couldn't have done this without paying off our debt.

Good Luck

It makes financial sense but I doubt that you'll pay it back.

@MillicentBystander101 I don’t think they are digs. Realistically as there is no legal obligation to repay and many posters have said they have seen similar situations before then it is not unreasonable to bring up the possibility of the savings not being relayed.

'The amount of debt is less than the amount in DC’s savings, so I would be able to pay everything off completely and then fully dedicate the money that I had been using to pay credit cards to repaying DC'

It sounds like you've learned the lessons you need to learn, and yes this by far the most efficient way to clear the debt.

My one Q is - if you spend the next 4 years repaying the savings, you won't be adding to those savings in the same period. Perhaps you don't have financial capacity to at the moment. But that would be my financial goal if I were in your position - to rebuild and increase your child's savings over this period as a thank you for the loan. Maybe you aim to add 5 or 10 % each year. Better that you are paying this 'interest' to your child than to be paying it to Barclays. This would leave me with an easier conscience if I were in your position.

I have read OP’s replies and see that they were caught out by 0% deals and have a high interest to repay now. I would use the savings however in the future I would only start repaying into the child’s account when I had no debts and I would use a JISA which means a parent cannot withdraw and only the child can at 18. I think that’s a better solution.

This is a hard no from me

The fact you can’t even get a different credit card shows you’ve a bad credit rating and the mistakes are not that historical. Once you start claiming you gave them the money so you can take it reassuring yourself you’d give it back it’s a new low.

We all know there will always be a good reason why you don’t. You’re living with no savings and shit happens, unexpected bills. There will always be a reason you can’t pay it or you should take it.

So for me it’s a no. Pay your own bills.

My feeling is ambivalent. Is the child old enough to be asked and to give permission?

When I was a (very small) child in the 1950s my aunt used to take me to see my grandmother twice a month. (Family split my mother was not welcome). Gran always gave me a small coin - sixpence or a shilling in old money- and tell me to get myself something. When I got in my mother used to say "let me put that away for you" and I naively thought it was being saved up for me. One day in a shop I asked for my granny money to buy something and my mother dragged me out of the shop crying. She told me that any money that came into the house was hers to spend as she wanted. She had simply absorbed it into the tiny family budget.

My gran was furious when I told her and said to my aunt "fancy stealing from a child". She opened a post office savings account for me in my aunts name and told me to ask her for the money if I wanted anything.

After that my grandmother vowed to never allow cash to fall into my mothers hands again. On several occasions she bought me things (new shoes, school uniform etc) but never anything that my mother could take from me and misuse.

I can't speak for OP but when I got into "credit card" debt years ago, I simply didn't have enough money for essentials. I took out credit cards so I could buy food and clothes and pay the mortgage and childcare, not for luxuries. It was cheaper to do that than get a loan as I could move the money around and not pay interest. So it doesn't mean the OP is terrible with money and that it will happen again.

I know it's a grey area, but lots of things given to the child aren't really theirs in the full sense when they are underage. Do people keep all their child's belongings, clothes, furniture that they've "given" them until they're adult because they belong to the child now? Of course not.

And child support is paid to parents rather than put in trust for a child. Because it's not about the child's right to future money, but about their needs now, and it sounds like OP needs that money to meet their child's needs now.

Have you done the maths correctly? Have you calculated 20 years+ because you have used minimum payment rather than paying a fixed amount?

Obviously you would save money if you used the savings. Paying back at the same rate you could even top the savings up, but would need to be properly committed to repaying it and perhaps leaving yourself without emergency funds in the meantime.