Bank accounts for teens

Kids’ accounts are a great way for children and teens to learn how to manage pocket money without getting carried away with their spending. Get help choosing the right account with our handy guide.

Kids’ accounts are a great way for children and teens to learn how to manage pocket money without getting carried away with their spending. Get help choosing the right account with our handy guide.

Anelda Knoesen
From the Money team
10
minute read
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Posted 11 FEBRUARY 2021

Bank accounts for kids and teens

Once a child turns 11, they can open their own current account. Also known as youth bank accounts, children’s current accounts are a great place to receive allowances, birthday money – and – when the child gets older – money from employers. Here’s how they work.

What bank accounts can teenagers get?

Teen bank accounts are similar to adult accounts, but there are a few features that you’ll find missing. For example, you need to be at least 18 to have an overdraft, so you won’t find one with a teen account. However, you’ll find that most of the other features are the same.

Teenagers can also set up Junior ISAs, which offer a good way for children to save until they turn 18. They won’t pay any tax on the interest earned, and the rates tend to be better than regular accounts, too. However, they won’t be able to take money out until they’re 18.

Can younger children get a bank account?

Children between the age of 11 and 17 should be able to open a children’s bank account, although there are some available for under-19s.

Under-16s will usually have to be accompanied by a parent or guardian to open an account, but 16 to 18-year-olds may be able to open an account themselves online, depending on the provider.

How do children’s current accounts work? 

Once opened, a children’s account works much like an adult current account. Children can use them to make bank transfers and set up direct debits and standing orders.

However, it’s good to know that kids’ accounts won’t include an overdraft (it’s illegal to offer a credit agreement, which includes an overdraft, to someone aged under 18), so your child won’t be able to spend more than they have.

Plus, you’ll usually need to give permission for your child to have a debit card if they’re under 16, giving you even more control.

Most kids’ bank accounts offer either:

  • a debit card, which can be used to buy online and in stores, and to withdraw cash at ATMs
  • a cash card, which can be used to withdraw money from ATMs

Some children’s current accounts can also be used with payment apps, like Google Pay and Apple Pay.

What if my child is under 11? 

Children can operate their own savings accounts from the age of seven. Another alternative is a prepaid card, which some providers offer from the age of six. Money is loaded onto the card, which is then used in the same way as a debit card.

How do teens bank accounts work?

A teen bank account is very similar to a child account. One of the main differences is that, from 16, they’ll be able to open an account by themselves. If they’re under 16, they’ll need a parent or guardian with them to open an account.

Just like a children’s account, a teen bank account doesn’t offer an overdraft until they’re 18. An overdraft is a form of credit agreement, which is illegal for under 18s.

If they’re 16 or older, they’ll be able to register for a debit card without a parent or guardian’s permission, which lets them buy things online and in shops without the need for cash, although they can also use it to withdraw cash from an ATM.

Plus, you’ll usually need to give permission for your child to have a debit card if they’re under 16, giving you even more control.

Just like any other FCA regulated bank account, a teen bank account is covered by the Financial Services Compensation Scheme (FSCS). As long as the bank is registered in the UK, it doesn’t matter how old the account holder is. The FSCS guarantees protection for savings up to £85,000, if the bank or building society goes bust. That should be more than enough to protect their pocket money or Saturday job wages…

What features can you get with a teen bank account?

Teen bank accounts can come with many of the features of an adult account, such as:

  • A debit card for spending online and in shops (including contactless payments)
  • Access to online and mobile banking
  • Access to local bank branches as well as cashpoints/ATMs

However, you won’t have access to adult account features, such as:

  • An overdraft
  • Access to credit products such as finance or loan agreements

Do teen bank accounts come with online banking? 

Yes, a teen bank account will allow you to use online banking or mobile banking apps. If you’re 16 or older, you’ll be able to use these to send money to friends and family, as well as pay for services online.

With online banking, you’ll also be able to take advantages of mobile banking features such as Apple Pay and Google Pay. These allow you to make payments simply with a tap of your phone.

Can my child get into debt?

No, your child can’t get into debt with a kids account. Overdrafts and other credit products are illegal to anyone under 18, which means your child will only be able to spend money that’s been deposited into the account.

Once they turn 18, they’ll be eligible for an overdraft and other credit products, and it’ll be their responsibility to look after their own money.

Can you get interest on a teen bank account?

Yes, child and teen bank accounts can earn interest, just like an adult account. Make sure to compare interest rates (AER) when looking for the right account for your child.

Prepaid cards vs. teen bank accounts

When looking for options for your child or teen, there are two main ones to consider. Prepaid cards and child or teen bank accounts. Depending on how much freedom you’d like your child to have, or the ability to restrict or monitor their spending, will help you decide which is best for them (and you).

Prepaid cards are very simple. Think of them like a prepaid energy meter or a pay as you go phone plan. You or your child simply top up the card with cash, which can then be used to spend online or in shops, using a chip and pin or contactless payment. A prepaid card can only spend what it has stored, so there’s no danger of your child going overdrawn or getting into money trouble. If they don’t have enough balance on the card, it will just stop working until you or they top it up.

On the other side, a teen bank account offers more freedom. They’ll be able to use their debit card to shop in store or online, while they’ll also be able to use mobile banking and online banking features. They’ll also be able to set up direct debits and standing orders, which are useful for things like their mobile phone contracts.

Reasons to choose a prepaid card for your child

Here are some of the advantages of a prepaid card, versus a teen bank account:

  • Available from eight years old (compared to 11 for a bank account)
  • Can set up an app feature to monitor their spending
  • Can set limits and parental controls

Reasons to choose a teen bank account for your child

Here are some of the reasons you might want to open a teen bank account for your child:

  • It’s free to open an account
  • They’ll be able to access online and mobile banking
  • Can set up direct debits and standing orders
  • Helps them learn how to manage their money

What should I look for in a teen bank account?

  • Withdrawal limits: accounts with daily spending caps limit the amount that can be withdrawn in a day.
  • Account opening amount: some kids’ bank accounts can be opened with as little as £1.
  • No monthly fees: most youth accounts won’t have a monthly charge, but check before applying.
  • Interest on accounts: some youth bank accounts will offer interest, although it’s likely you’ll get more with a children’s savings account.
  • Account tracking: some accounts offer mobile apps and text alerts to help kids keep track of their money.
  • Online, mobile and telephone banking: for ease of access and the ability to see where their money is going.

How do I open a bank account for my child?

Child bank accounts are available from selected banks when they turn 11. However, they won’t be able to open one by themselves until they turn 16. Until then, they’ll need a parent or guardian to open the account for them.

You’ll need to provide a few details, such as current address and contact information. You’ll also need to take proof of identity for both you and your child in the form of a passport, driving licence or birth certificate, along with proof of address. For under 16s, the registered address will need to be the same as the parent or guardian.

How many current accounts can my child or teenage have?

You can open as many accounts for your child or teen as you like. This may be to make the most of a better interest rate, a certain reward or gift, or simply to split up some of their money for a specific reason.

How do I manage a children's bank account?

You might be pleased to know that children’s bank accounts don’t come with an overdraft, which means they can’t get themselves into any debt. However, you may still want to help them manage their money.

If your child is under 16, the bank will ask you for permission to issue them with a debit card. If you’re uncomfortable with them being able to freely spend money like that, you could instead restrict them to a cash card, limiting their ability to spend. This is particularly useful for preventing them spending unnecessarily online.

What happens to a teen current account when the child turns 18?

Child or teen bank accounts usually become an adult current account automatically, but this is something to check with the provider. They should also have any direct debits/standing orders carry on as normal and move over to the adult account.

When a child turns 18, they’ll also become eligible for credit products, which includes an overdraft. But, they won’t automatically get an overdraft when they turn 18. They’ll normally have to discuss this with their account provider first.

How does tax work on children’s banks accounts?

In most cases, children won’t pay tax on money they earn or accrue in interest. There’s a starting rate for savings of £5,000, plus the Personal Savings Allowance of £1,000 and the Personal Earnings Allowance (in the 2019/20 tax year this was £12,500). Your child won’t be liable for tax unless they exceed these.

If a child receives more than £100 in interest from money given by a parent or family member, the parent or family member will have to pay tax at their own rate if the interest puts them over their own Personal Savings Allowance.

How do I find the best account for my child or teen?

Compare the Market doesn’t currently compare bank accounts for teens or children, but here are some tips for what to look for:

  • Minimum opening amount – the account will need some money to start with. Some can be opened with as little as £1, so it’s worth looking around if you just want to open an account, but don’t have much to start with.
  • Monthly fees – these won’t apply to most kids and teen accounts, but it’s worth checking to avoid any surprises.
  • Interest – like any bank account, you’ll want to get a competitive interest rate. Proper savings and ISA accounts will usually offer more than current accounts, but it depends what you need the account for.
  • Limits – this includes spending and withdrawal limits to keep a cap on their spending. Ideal to help them learn how to handle their money properly. Different accounts will have different limits, so it’s worth comparing.
  • Online banking – this can help kids and teens keep track of their money easily. It can also be used to set up alerts to help stop them spending their money all at once, and to see where their money is going.

If you have a teenager preparing for university, you can find everything you need to know about student accounts.

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