FINANCE BANK ACCOUNTS
First account
When is the best age for your child to open a bank account? Sara McDonnell looks
at what the high street banks offer for day-to-day money matters, while legal experts
Bircham Dyson Bell explain how best to make long-term provision for your children
M
ost parents give their children pocket money in Most children don’t pay tax on savings interest, and once
s
ome form or another, but how much they give parents have completed the Revenue & Customs R85 form,
and how it is spent varies wildly from household banks will pay interest without deducting tax. However, it is
to household. A 2008 survey conducted by the important to note that if as a parent you give your child a gift of
Office of National Statistics shows that the average weekly money that produces more than £100 of gross interest per year,
amount given to a child in Great Britain is £4.80. Surprisingly, the income will normally be taxed as yours. As one mother told
the average amount of pocket money given does me: “It’s worth making sure you keep track of where the money
not necessarily mirror household income. has come from, as the Inland Revenue will want to know that
While children in the highest income you didn’t give it to them”.
group received the highest average,
Most
Once a child reaches eleven, there are many more
(£8.10), children in the lowest income
children don’t pay
bank accounts targetting them. HSBC, for example,
households received the second offers a savings and current account package,
highest amount (£6.53).
tax on savings interest,
encouraging children to recognise the difference.
If you’re giving these kinds of
and once parents have
Children of seven or over can open a savings
sums to your kids, you may think
completed the Revenue &
account with the bank, which on their eleventh
there’s little need for them to open
Customs R85 form, banks
birthday opens a linked current account with an
up a bank account. Any long-term
will pay interest without
accompanying cash withdrawal card. Tailoring
saving for them is likely to be going a bank account in accordance with a child’s age is
into a trust fund (see box for the benefits
deducting tax
something that Barclays also do. Accompanying its
of these) and if your child wants to save to BarclayPlus account for 11-15 year olds is the Young
buy something, then a colourful piggy bank Persons Account for those aged 16 to 19, which offers online
is a far more visual incentive than looking at a bank statement. banking and other benefits for its maturing customers.
And opening a bank account for a child can seem like a big step The Royal Bank of Scotland’s Revolve account for 11-18
to take; after all, it’s symbolic of them becoming an independent year olds has features designed to appeal to teens; a debit card
person with their own means of survival – not to mention the which can be customised and free texts or music downloads
responsibilities that come with it. when a mobile is topped up at one of their cash machines.
However, a significant proportion of children do open “Young people have different banking needs to their parents
bank accounts before they’re 16. The aforementioned survey and the RBS Revolve and NatWest Adapt accounts are designed
also shows that just over three-quarters of children aged 8-15 with that in mind,” says Amanda Scott, head of youth banking
in the UK save pocket money, and of those, more than a third at RBS and NatWest. “This is an ideal age to learn about using a
hold a bank or building society account. If nothing else, a bank PIN to buy things, what a bank statement means and checking
account is a place to put those cheques that grandparents and how much money is in the account before shopping.”
great aunties put in the post at birthday and Christmas time. Needless to say, none of the accounts mentioned offer
But when is the best time to get one started? Any time from overdraft facilities, or indeed any opportunity to start getting
age seven, according to the British Bankers Association, who say into debt. The emphasis at this age is on saving, or at least
that before then, parents usually open one for them. recognising that once money is spent, it’s gone.
If your child’s cheques from granny are significant sums, Nevertheless, in response to the fact that 90 per cent of
K
C then it would be worth looking at a high interest savings adults in the UK never received lessons on managing money at
T
O
S
R account such as Nationwide’s Smart account or the Halifax’s school, a number of banks have created educational resources
E
T
T
U Save4it account for under 16s. These offer a good rate of interest to help teach the value of good money management. RBS and
H
:
S
T
O and child-friendly features such as money-off vouchers (Smart) NatWest host MoneySense websites, a teaching resource with
O
H
P or a free calculator and coin bank (Save4it). facts about how banking works, interactive articles, tools and
54 FIRST ELEVEN SPRING 2010 WWW.FIRSTELEVENMAGAZINE.CO.UK
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