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

Some people are almost childlike in their black and white view of things.

Your child needs a roof over their head. They need food and heating. They need a parent who isn't stressed, depressed and swimming in debt because (obviously, one would think) that has a tremendous impact on the standard of living of that child. There is absolutely no point in your child having a little nest egg for the distant future which comes at the cost of their well-being and security during their formative years.

Take back the money, pay your debts and once you are on your feet then you can hopefully start a savings account for them again in the future. Take a common sense approach.

@ithinkilikeit some replies read as very judgmental - to me, anyway. Like I said, if you were to claim UC, and your child has accessible savings of over £3000, it affects your entitlement and you are expected to use them. No one is accusing dwp of theft, and they won't have any intention whatsoever to reimburse the child's savings.

How much is the debt? How much is in savings? How much is the monthly repayment on the debt? How much would you be comfortable repaying?

but never anything that my mother could take from me and misuse.

But, I'm guessing your mum used the money to clothe, feed you and put a roof over your head. It sounds like she was on hard times.

Definitely pay off the debt. Savings can be replenished but debt can spiral out of control. You do what’s best for you.

YANBU - it’s your money. As mentioned above, clear the debt first. It doesn’t make sense to have savings earning a low interest rate compared to paying high interest on the debt. I have done this myself, and it was for the benefit of our family as a whole. I am now in a position to pay it back to DC, however when needs must, you absolutely have the right to use the money.

I think it's far more sensible to use the DCs account. You put the money there so you can borrow it. Makes no sense to be incurring interest when you don't have to.

How much ££ are we talking?

[quote ithinkilikeit]@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.[/quote]
And if she can't "repay" then it's as simple as that - she cannot afford to sustain their household and pay the amounts that she was doing into savings. She can't pay more than she has.

OP shouldn't be flogging herself trying to "repay" money that she put aside with good intentions but as it transpires cannot afford. She just needs to work out a sustainable budget for the household and if she's got enough leftover to save something for her son then that's great. She was just too optimistic to be begin with, but now she can be more realistic.

I'd clear the debt and pay back the savings.

But don't make it a habit.

Of course it’s okay
My children have savings accounts that are in their name and all the money has been paid in by DH. They know it is there’s when they get older ONLY if we don’t get into financial straits and need it to keep a roof over our heads. So in your situation we would absolutely use that money. Wouldn’t even question it.

If the money had been given by relatives that’s a whole different situation. Then it’s a gift to the child directly and in my mind it’s ringfenced.

My DP’s did this when they bought their house - I was 7. They never, ever paid it back, stating that they had spent more on bringing me up than I could ever repay. It still rankles 50 years later. Only do it if you really will pay it back, OP, otherwise a lifetime of resentment might happen.

It's the parents' money which they have set aside with the plan to give to the child when they are older, circumstances have now changed and so the plan has now changed and the money is best put towards a more immediate need, though it's nice the parent has the intention of making another attempt at setting aside money for them in the future.

This notion of small children have hundreds or thousands of pounds of their own money is absurd. Until they're old enough to be responsible for it, the money needs to be in the hands of adults who can use it appropriately and as needed, especially when it always was the adults' money to begin with

(it's a little different if the money was given by somebody other than the child's caregiver, but in that situation I would interpret that whatever stipulations they've made are the adult the money belonged to maintaining control of it - i.e bequeathing a child money for when they are 18 is saying that is when the money will really move from the giver's control to the recipient. but not relevant in this case)

I say no. Because I don’t think the parent should take an “easy out” to repaying the debt - parent needs to make a proper plan to repay, examine spending habits, and outgoings, solve the problems once and for all and be in a better position should life throw difficulties their way again in the future.

The way you should use an interest free period is to repay during that time, not to have it become interest bearing. The fact that hasn’t happened indicates a wider issues here, as does the fact they can’t find any lower borrowing or a new 0% to transfer it to.

Despite the obvious good intentions, I don’t think for a minute that the money will actually be repaid to the child.

I would stop paying into the savings account though and put that money towards the debt going forward. I’d also put that money somewhere that isn’t instant access. When I had debt to repay I paid a token amount into savings for my child, into a child ISA, which meant family members could also contribute safe in the knowledge it was guaranteed to go to my child as it was inaccessible to parents. Once my finances improved I increased the monthly contribution

My parents had a very low income ( I was always on free school meals). When they ran out of money for essentials my dad would borrow from me. He would give me a promisory note saying what he had borrowed and stating it would be repaid at 2% compound interest. I would put this in my piggy bank.
At the time, this seemed normal to me and it taught me about borrowing and interest and repayment.

He did always pay back though.

Clear the debt, set up a standing order to repay the child’s savings
But
Also make a savings pot of your own.

I would say YABU only because this happened to me. Parents and other family family members used to pay into mine and my bro's savings accounts. My mum got into debt when her and my dad got divorced. My mum used our savings. We never got repaid. I only found out because I asked why we had savings accounts with no money in them and she confessed. I don't resent her at all I am on great terms with my mum, however, it would've been nice to see some money when I left school/ started working etc. Maybe I would've taken my driving test sooner or even moved out sooner because I would've been a bit better off financially. No hate just thoughts of what if though...

As money in the savings account was paid in by yourself I think what you are doing is fine and makes sense for everyone, including your DC who would be directly/indirectly impacted by the interest costs.

@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. Absolutely. Set up a direct debit to pay it back.

This is why I haven't told DC about their savings and why they are in mine and DH's names. As much as we are hoping and expecting to be able to give them a nice lump sum when they're older, none of us know what's around the corner. Being able to save for your kids is a luxury that many, many people sadly don't have. If DH or I were to become injured or ill and not be able to work for example, we would likely have to use the money we had earmarked for the kids on other expenses. I would have absolutely no shame in doing that whatsoever, and nor should I. It's my money, just earmarked for something.

The only difference in OP's case is that her DC knows about the money and the bank account is in their name. In reality it's no different.

Will the money clear your debt. Say if you had been saving £50 per month for your child and £100 on the debt by clearing the debt you should still be able to put £150 away each month. Otoh if you don't clear the debt you will probably not be able to afford to continue saving for your child as you will need that money for your repayments due to the high interest rates. In some ways it's more like borrowing the money. It's what banks do as they lend against the high volume of savings they hold

This notion of small children have hundreds or thousands of pounds of their own money is absurd. Until they're old enough to be responsible for it, the money needs to be in the hands of adults who can use it appropriately and as needed, especially when it always was the adults' money to begin with
There is serious doubt that the money will ever actually be repaid rather than simple disappearing into the ether, in this particular case.

Yabu.
We borrowed our dc savings once years ago when dh unexpectedly lost his job. It was used to pay a month's mortgage and keep a roof over our heads while we organised our new financial situation. I still feel guilty about this now.

You need to look at long term management to reduce your debt rather than a quick fix that actually solves nothing.

@dilmor there are no gifts from friends or family in this account only money that the op has squirrelled away.

Simply...