Accounts for children and young people: what to consider

Children and Youth accounts are ideal for introducing youngsters to dealing with money. They operate on a credit basis, unlike adult accounts, which can be withdrawn thanks to the overdraft facility. So there is no danger that the child will spend more money than in the account. Stiftung Warentest compared the terms of a total of 112 banks and savings banks.

Calculations for children and young adults – from what age do they make sense?

The ideal time point for opening the first checking account cannot be determined in one lifetime. Not every child shows the same level of maturity, so parents must decide for each of their children individually when they want to teach them how to keep accounts. According to Stiftung Warentest, the German Banking Industry Association sets a twelve-year age for mentoring. Children at this age generally have the ability to be responsible for their own money.

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

Most offers from banks and savings banks do not automatically end when the child reaches the age of majority. Young people can still benefit from cheap account models as long as they meet some other necessary criteria. This usually includes attending high school, starting an apprenticeship, doing a voluntary social year or studying at university. If your child reaches the age of majority while using the account, the bank can request proof from the school, training company, or university, which must be renewed annually.

You need this to open an account for your child

Banks have different requirements for what is required 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 allow a power of attorney to be provided by the second parent or for the second parent to visit the bank after signing the signature. If you want to open an account for a child who does not yet have an ID or passport, the birth certificate can be used as an alternative for the bank to identify you. All parents must also present a valid identification document (ID card, driver’s license or passport). In the case of adult children who wish to obtain a new offer or wish to continue to use it, proof from a school, training company or university is often required in order for the special conditions to remain in effect. Since opening an account for children and young people may take some time, you should schedule a consultation at the desired branch in advance.

Children and Youth Accounts – These Terms Apply

It is important for the first account for children and young adults that it is actually a free account. This means that there should be no account management fees or debit card fees. Most banks offer this account model for children and young adults. As a rule, offers such as access to online banking or banking applications are also free to the account holder. Since many bank branches want to reduce the hassle of completing transfer receipts, some branches charge a fee for making a paper transfer. Here it is simply useful to ask about the exact terms of the type of transfer during the consultation at the branch.

In addition to free account management, access to cash at ATMs is also an important criterion. Even if many banks allow you to withdraw money from their own machines without fees, not all banks have the same machines. So you should choose a bank that offers free cash withdrawals from many ATMs. Savings banks, for example, offer about 25,700 thrift bank terminals across the country. There is usually a fee for withdrawing cash abroad. However, there are exceptions where banks allow free withdrawals abroad. In most cases, they are linked to prepaid credit cards or credit cards from the same lending company. Some banks, such as Comdirect Bank and Deutsche Bank, allow you to withdraw money abroad for free using your debit card.

Credit cards and prepaid credit cards

Only pure credit cards are issued by banks to adults. Prepaid credit card terms vary from bank to bank. Unlike a regular credit card, prepaid credit cards have the advantage that you can only spend an amount pre-charged with it. So it can be a good choice if you want to give your child free access to pocket money while on vacation abroad without incurring terrible costs. However, unlike debit cards, using 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 banks tested by Stiftung Warentest offer a free credit card.

Interest terms for children and youth accounts better than adults

In order to facilitate the entry of new customers into the world of finance, many banks offer better interest rates on children and youth accounts than on adult accounts. Exact percentages vary greatly, depending on the provider. While most banks offer only about 0.5 percent, some offer interest rates of 1.5 to 3 percent. However, these offerings are usually regionally restricted. Thus, the outlook on the situation of neighboring banks could change. In addition, good interest rates are often set at certain maximum amounts. Depending on the bank, this money can range from 500 euros to 1500 euros.

Accounts for children and teens – a good choice on the right terms

In short, it can be summed up as follows: Children must learn how to take responsibility for their money. Children 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 the monthly pocket money directly to it. As a result, youngsters always have an overview of their finances. However, it is advisable initially to accompany the child in his first steps and be open to the challenges he faces. This also includes allowing the child to make their own decisions and make mistakes. This is the only way she can learn to consciously deal with her finances.

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