Encouraging your child to learn how to save money can be one of the harder aspects of parenting. However, this task is made easier by innovative financial institutions who have come up with simple and fun online banking sites to help children learn this vital life skill.
What are bank accounts for kids?
These are bank accounts particularly designed for young people under the age of 18. They often feature kid-friendly features such as colourful graphics, fun graphs or even games to help kids understand their banking. Most bank accounts for youth are website and phone app-based, while some also include ATM access when the child is old enough to have a debit card linked to their account. Bank accounts for kids with a card generally start issuing cards for children from the age of 12 upwards.
Online bank accounts for kids tend to be very user-friendly and include many educational games which help children understand concepts such as saving money, paying interest and sticking to spending limits.
What is different about bank accounts for kids?
A key feature of youth accounts is that they generally don’t charge account opening fees, application fees or ongoing account fees. They may also offer incentives to encourage children to save money, with special deals available if certain conditions or targets are met with regard to withdrawals and deposits into the account. For example, many children’s bank accounts offer a bonus interest rate if the closing balance at the end of the month is higher than at the start of the month, or if no withdrawals from the account are made during the month. Other incentives which may attract bonus interest rates include a minimum deposit into the account per month. For instance, if $50 is deposited into the account that month, a bonus additional interest rate of 0.4% applies for the balance of the account.
What paperwork will I need to open a kids’ bank account?
This will depend on whether you’re opening the account with a bank or building society or credit union where you’re already a known customer, or if you’re approaching a new bank where you’re unknown.
If you’re a known customer at the bank, to open a joint account with a child (or on behalf of a baby) you’ll need the child’s birth certificate plus photo ID for yourself, such as a driver’s licence. Some banks stipulate two forms of ID are required for the child, so it is common practice for schools to issue a standard letter for parents to use at banks confirming the child’s name, date of birth and residential address plus other contact details if known (such as parents’ names and phone contact numbers).
If you’re intending to open an online bank account for a kid where you aren’t a known client, you may need to provide 100 points of ID as a new adult customer to the bank. This may include one or two primary photographic documents such as a passport, driver’s licence or proof of age card, plus another secondary ID form such as a birth certificate, citizen certificate, pension card, Medicare card, utility bill or bank statement.
What are the legal age milestones for kids and banking?
Birth to age 11
From birth to 11 years of age, bank accounts for babies and kids have to have a parent or adult as a joint account holder.
Age 12
This is the legal age at which a child can open a bank account in their own name in Australia (although some of the big major banks have their own minimum age limit of 13 or 14 for independent kids’ accounts).
Age 13
Debit cards (with no credit facility) are widely available at age 13 if a parent is a co-signatory to the account, although some banks and building societies do now issue pre-paid debit cards at age 12 for joint kids’ accounts.
Age 14
A teenager is permitted to have a youth bank account with a debit card (but no credit facility) linked to their sole account without parental permission.
Age 16
Many joint parent/child accounts allow the child to disable or switch off parental control once the age of 16 is reached (or remove the need for the parent to be a co-signatory to the account).
Age 18
At 18 years of age, an Australian citizen is legally considered to be an adult and can open bank accounts and be offered credit in their own name.