Accounting for Children and Adolescents: What You Should Consider

Accounts for children and young people are ideal for introducing young people to managing money. They work on a credit basis as opposed to adult accounts, which can be overdrawn thanks to overdrafts. So there is no risk of the child spending more money than it has in the account. Stiftung Warentest compared the conditions for a total of 112 banks and savings banks.

Accounts for children and young people – From what age do they make sense?

The perfect time to open your first checking account cannot be set at a single age. Not all children show the same level of maturity, so parents should decide for each of their children individually when they will teach them to keep accounts. According to the Stiftung Warentest, the German banking industry association states an age of twelve years for briefing. Children at this age generally have the ability to take responsibility for their own money.

How different the opening age for a current account can be has already been shown in the many banks tested. Some of them open accounts from birth, while others require children to be at least in school or over the recommended age of 12 years. Especially with direct banks that do not have a branch, an account can only be opened as an adult. When your child is ready at his own expense, you should therefore decide on it in consultation with all guardians.

Most offers from banks and savings banks do not automatically end when the child is of legal age. Young adults can still benefit from cheap account models as long as they meet some of the other necessary criteria. This typically includes going to a high school, being started in apprenticeship, doing a voluntary social year or studying at university. If your child comes of age while using the account, the bank may request proof from the school, educational institution or university, which must be renewed annually.

You will need this to open an account for your child

Banks have different requirements for what it takes to open an account. Some branches insist that both parents come to the bank with the child so that an account can be opened. Others provide the opportunity to present a power of attorney from the other parent, or that the other parent can visit the bank after the fact to have their signature signed. If you would like to create an account for a child who does not yet have an ID card or passport, the birth certificate can be used as an alternative for the bank to identify you. All parents must also present a valid ID document (ID card, driver’s license or passport). In the case of adult children who want to take up a new offer or want to continue using it, proof from a school, an education company or a university is often required for the special conditions to remain in place. As it can take some time to set up an account for children and young people, you should make an appointment in advance for a consultation in the desired department.

Child and youth accounts – These terms apply

It is important for the first account for children and young people that it should actually be a free account. This means that there should be no account management fees or debit card fees. Most banks offer such an account model for children and young people. As a rule, offers such as access to online banking or banking apps are also free for the account holder. Because many bank branches want to reduce the hassle of filling out banknotes, some charge a fee for making a paper transfer. Here it may simply pay to inquire into the exact conditions for the type of transfer during the consultation in the branch.

In addition to free account management, access to cash at ATMs is also an important criterion. Although many banks allow you to withdraw money from their own ATMs free of charge, not all banks have the same ATMs. You should therefore choose a bank that offers free cash withdrawals from many ATMs. The savings banks, for example, offer around 25,700 savings bank terminals nationwide. There are usually fees for withdrawing cash abroad. However, there are exceptions where banks allow free withdrawals abroad. In most cases, these are linked to prepaid credit cards or credit cards from the same loan company. Some banks, such as Comdirect Bank and Deutsche Bank, also allow you to withdraw money abroad for free with your debit card.

Credit cards and prepaid credit cards

Pure credit cards are only issued by adult banks. The conditions for prepaid credit cards differ from bank to bank. Unlike a regular credit card, prepaid credit cards have the advantage that you can only use a previously loaded amount with them. They can therefore be a good choice if you want to give your child free access to their pocket money while you are on holiday abroad without incurring terrible costs. However, unlike debit cards, the use of prepaid cards often incurs additional costs. In most cases, the bank charges an annual fee for this, which can range from 5 to 42 euros per year. A total of 30 of the banks that Stiftung Warentest has tested even offer a free credit card.

Interests for children and young people are better than for adults

To make it easier for new customers to enter the financial world, many banks offer better interest rates on child and youth accounts than on accounts for adults. The exact percentages vary widely, depending on the provider. While most banks only offer about 0.5 percent, there are some that offer interest rates of 1.5 to 3 percent. However, such offers are usually regionally limited. A look at the conditions for the nearby banks may therefore change. In addition, the good interest rates are often set at certain maximum amounts. Depending on the bank, these can range from 500 euros to 1,500 euros.

Child and teen accounts – Good opportunity on the right terms

In short, it can be summarized as follows: Children must learn to take responsibility for their money. Child and youth accounts are ideal for this, as long as their use remains free and flexible. Parents can use their child’s account to transfer monthly pocket money directly to it. This means that young people always have an overview of their own finances. In the beginning, however, it is advisable to follow the child on its first steps and be open about the challenges it faces. This also includes letting the child make their own decisions and making mistakes. This is the only way it can learn to handle its finances consciously.

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