Youth Bank Accounts

An in-depth look at what banks and other financial institutions offer for youth bank accounts and how to compare them with Savvy.

Last updated on April 26th, 2022 at 02:55 pm by Cate Cook

Find the best bank accounts for young people

A variety of financial products are available to introduce young people to the world of banking, ranging from transaction accounts to savings accounts to online accounts.  Take an in-depth look at youth bank accounts with Savvy and compare products to find the account best suited to your child’s age and banking needs.

What are youth bank accounts?

Youth bank accounts are accounts designed for young people who are no longer infants but are yet to reach 18 years of age.  They’re designed for children from the age of ten and upwards.  Prior to this age, accounts for babies and very young children tend to be called junior bank accounts.  Youth accounts still come with parental controls, as most children’s accounts do, but they progressively allow your teen to have more financial freedom as they mature.

Naturally, bank accounts for kids come with colourful graphics, savings games and easy to use features.  However, savings accounts can also come with bonus interest rates which can really boost a young person’s savings, so it’s definitely worth comparing accounts to make sure you’re getting the best one for your child.  Of course, the features available will depend on whether you choose a savings account, a transaction account, or a hybrid of the two.  Features and benefits to look out for include:

  • No account-keeping or monthly fees
  • Linked Visa or Mastercard debit card with fee-free transactions
  • Smart phone tap and pay with linked Google Pay, Apple Pay or Samsung Pay
  • Online, mobile phone and smart watch platforms
  • Bonus interest rates which are applied when certain conditions are met, such as a minimum amount deposited each month, or no deposits made
  • Sub-accounts which can be named individually and which separate savings into particular named accounts, such as ‘holiday’ or ‘new bike’

How do I choose the best youth bank account?

It’s important to familiarise yourself with the youth banking market and then compare banking products before you make a choice about which bank account is best for your child.  Research has shown the bank a child is introduced to as a young person is the one most likely to be used later on as an adult bank account holder.  For this reason, it’s important to choose carefully and conduct a thorough comparison of all the accounts available with Savvy before making your final choice on which account is the best. Some of the factors to consider in the account comparison process include:

  • comparing the interest rates being offered on savings accounts and look at the features that come with them
  • finding out what the bank offers for new account holders who open an account in Australia
  • seeking out well-designed educational tools on the bank’s online site, which could help to teach your child about banking and saving
  • checking if it’s possible to link a debit card to the account and what fees may be charged if the card is used overseas
  • finding out whether your child will be able to use ATMs to withdraw cash, make EFTPOS payments and use BPAY
  • always keeping an eye out for hidden fees or restrictive conditions. There may be fees charged if a limit on withdrawals is exceeded, or if non-linked ATM machines are used.  Advertised interest rates may not be awarded if deposit targets are not met, too much is withdrawn from the account or too many transactions undertaken which exceed a monthly limit
  • making sure you read all the terms and conditions of your youth bank account carefully so you’re aware of the main features of the account.

What banking tools are available for young people?

Some of the banking tools and features offered for youth accounts you may find useful include:

  • the ability to immediately lock a debit card if your child should lose their card
  • the ability to customise a debit card by colour or photograph (for a set fee, often $10)
  • the ability for parents to set limits, such as limit the number of withdrawals per day, or withdrawal dollar amount per week
  • multiple platform compatibility so your child can check their account balance online, on their phone or on their smart watch
  • compatibility with digital wallets (such as Google Pay, Apple Pay and Samsung Pay)
  • ‘sweeping’, where funds are automatically transferred or ‘swept’ from a transaction account to a savings account when a certain limit is reached, allowing your child to automate their savings
  • the ability to set savings goals (such as $10 or $50 a month) and to be rewarded with a higher interest rate when those goals are reached
  • the ability to write task lists and allocate pocket money to tasks so a child can watch their money grow as they complete jobs

Here’s more of your frequently asked questions about youth bank accounts

Do youth bank accounts offer a higher interest rate than standard adult bank accounts?

Yes – you’ll probably find that a youth savings account will offer a much higher bonus interest rate to encourage young people to save money.  This may even be 1% to 3% p.a. higher than the equivalent adult account, so it’s well worth taking advantage of these benefits whilst your child is still young enough to qualify for bonus interest.  It’s important to start the comparison process for accounts with Savvy.

What is the legal age at which a child can have their own bank account?

From the age of 12, a child in Australia is permitted to have a bank account in their sole name, although they will require a parent to accompany them to open the account.  Once they reach 14, they’re able to open an account on their own without a parent or guardian present.  Similar principles apply for having a debit card.  Some banks will issue debit cards to a child as young as 10 if they are accompanied by their parents, but from age 14, a child is permitted to have a card with no parental involvement.

If my child’s bank account earns interest, do I have to declare it as income on my tax return?

According to the Australian Taxation Office, this will depend on whether the joint account you hold with your child belongs to them or you.  This comes down to the intent of the account, who deposits the funds and who decides what they’re spent on.  These rules are in place to prevent people from avoiding paying tax by holding their own money in the name of their child.  If the child is aged under 16 and their joint account earns less than $120 per year in interest, no tax is payable.   If interest earned is more than this in one year, you may have to supply the ATO with a tax file number for your child and their date of birth.

Is account ‘sweeping’ a good idea?

This depends on whether you and your child want to actively manage their savings or if you prefer to ‘set and forget’.  Having an automatic sweep feature can be useful if you want to build funds in a savings account with very little thought involved.  Simply deposit your child’s pocket money (or birthday present money from relatives) into their transaction account, set the sweep limit and excess funds will automatically be transferred into the child’s savings account.  However, on the other hand, your child may want to actively manage their savings and get enjoyment out of reaching a savings target and transferring money into their savings account themselves.