The best bank accounts for teenagers – that will never let them overspend

Rather than being frequently pestered by requests for money for sweets/clothes/cinema tickets, many parents decide to equip their children with their own current accounts. 

Not only do they provide an easy, cash-free way to give pocket money – if you have that kind of system in your household – it also provides an opportunity for the young people to start managing their own money.

In addition, they can start to understand more about financial security, by keeping their Pins and passwords to themselves.

Most children’s bank accounts offer features like a payment or debit card, and apps to enable children to track their spending. Some can also be set up with the likes of Apple and Google Pay. 

There are restrictions on certain features; children’s accounts won’t offer overdraft facilities, for example. 

Most children’s bank accounts are free, meaning there won’t be a monthly fee, though there are a few exceptions.

Lucinda O’Brien, finance expert at Money.co.uk, said: “While every account offers different features, you can usually find one that lets your child receive payments, withdraw cash, make payments on a debit card and use online banking.”

Children’s accounts used to come with cute incentives, such as character piggy banks, but the top “perk” now tends to be credit interest. 

Andrew Hagger from MoneyComms, said: “This can be an important feature if you want your child to save, as well as manage their own spending. Note, though, that rates can often be beaten by those on children’s savings accounts.”

As with an adult version, money held in a child’s current account should be protected up to £85,000 under the Government-backed Financial Services Compensation Scheme (FSCS) – though it’s always best to double check your provider is covered. 

Here, we take a look at some of the best children’s current accounts on the market.

Can I open a current account for my child?

The ease with which you can open an account for your child, or have them open the account for themselves, depends on the provider and what kind of account you want. 

Some providers only allow children’s bank accounts to be opened if a parent holds an account with them, while others will need you to provide proof of identity and proof of address before they’ll allow you to open an account on your child’s behalf.

An increasing number of providers allow accounts to be opened online, but you may still need to physically go into a branch to finish the job. 

That said, some banks allow parents to open an account on behalf of their younger child. 

Ms O’Brien said: “Typically, a parent will need to be present to set up a bank account for a little one under 16. In many cases, you can complete your application online. But you or your child may still need to pop into a branch with proof of ID and address.”

Can I monitor my child’s spending?

Once a current account is set up for your child, they are the legal owner of the account, and the money in it.

Mr Hagger said: “Unlike the pocket money card accounts, such as GoHenry, Rooster, Osper and Nimbl, adults usually cannot monitor their son or daughter’s spending with a child’s current account.”

While parents cannot make withdrawals, you can pay money into the account – this can help your child save, or provide a way to restrict their spending if the only money they can access is what you give them.

Ms O’Brien added: “Any interest earned on the account is usually tax-free. Tax will only be charged if the child’s annual income is above £12,570, or if they earn more than £100 interest on money given to them by their parents.”

The “£100 rule” affects parents, rather than children – the interest your child earns above £100 from money you give them will be added as if you were the one who earned the interest. Therefore, if it exceeds your personal savings allowance, you may have to pay tax on it.

Are children’s bank accounts safe from scams?

Unfortunately, children’s current accounts are still open to scams and fraud attempts – in just the same way any adult current account is. 

With this in mind, it’s important to help the young person take all the precautions they can to stay safe, such as never sharing their Pin and making sure any online banking passwords they have are difficult to guess.

Children’s accounts can be particular targets for fraudsters seeking “money mules” – these are unwitting scam victims whose accounts are used to help them launder money. Children as young as 10 will be taught about the dangers of these schemes, but it’s still worth sitting your child down to explain how to avoid them. 

What happens to a children’s bank account after they turn 19?

Children’s accounts tend to expire once the holder reaches 18 or 19, at which point most banks automatically update the account to an adult equivalent. 

This is a good time for the young person to review what’s on offer from other accounts and providers, to ensure they’ve got the right account for their needs. Depending on their plans for the future, they may be at the point of wanting to open a student bank account.

The best current accounts for kids and teenagers

Santander 123 Mini current account

Available for those aged 13-17, this account offers up to 3pc on balances up to £2,000. 

Mr Hagger said: “The interest is tiered. You can get 1pc on amounts below £1,000, 2pc between £1,000 and £1,500, and 3pc on balances between £1,500 and £2,000.” Once you reach the higher interest threshold, you’ll receive that level of interest on the entire balance.

However, if you have more to save it may be best to hold it elsewhere, as no interest is earned on amounts above £2,000.

If the child is under 13, the account must be opened “in trust” by an adult with parental responsibility. They must also be an existing Santander customer. 

A young person aged between 13 and 17 can apply online. They can get a contactless debit card or a cash card, the latter can only be used with ATMs.

Mr Hagger added: “On the child’s 19^th birthday, the account automatically transfers to an adult current account.”

HSBC – My Money account

Available for children between the ages of 11 and 17, this account is operated via a contactless debit card and an app. The maximum cash withdrawal is £100 per day (or as much as the child has left in their account).

If the child’s parent or guardian is an HSBC customer, the child can apply online. If not, the young person has to book an appointment at a branch. 

The account-holder can check their balance at any time via online and mobile banking.

Mr Hagger said: “While the current account pays no interest, holders get access to a separate MySavings account, paying 5pc on balances up to £3,000.”

Nationwide FlexOne account

This current account, available to those aged 11 to 17, pays 2pc on balances up to £1,000.

Young people can apply online, unless they are aged 11 or 12, in which case they must apply in-branch.

The account comes with the option of a cash card or debit card. Cash cards can only be used to get money from ATMs and to print mini statements. 

The maximum limit for contactless debit card payments is £45. For added security, parents can speak to Nationwide about further restricting the ability to make contactless payments.

Mr Hagger said: “The child can keep the account until they reach 23. They must then move to Nationwide’s FlexAccount or FlexDirect.”

TSB Under 19s bank account

This account, paying 2.5pc on balances up to £2,500, and 0.1pc above this, is designed for children and teenagers aged 11-17. It comes with a contactless card to make purchases or withdraw money.

If the child is aged between 16 and 18, they can apply alone in-branch. Below this age, a parent or guardian will need to be present. 

Mobile and internet banking makes it easy for the teen to track their spending. 

Starling Kite account

Kite from Starling Bank is available to children aged 6-16. It pays no credit interest, and can only be opened via the parent’s mobile app. 

It is open to children of parents who already bank with Starling and costs £2 a month, or £24 a year – but the first month is free.

Parents can top up their child’s account via their Starling app, and – unlike many other accounts – can also keep an eye on their spending. Children get their own version of the app, where they can also manage their account. With this account, it is possible to set daily, weekly and monthly spending limits. 

For those aged 16-17, Starling Bank then offers the teen account, which can be applied for via their own app. This comes with less parental oversight, and also pays credit interest, but note this is at a very low rate of just 0.05pc.