How to choose a bank account for your family

The right type of account can provide practical lessons, from teaching children the value of money and saving to empowering them with spending tools. However, with various options available, including prepaid debit cards for kids, selecting the right account for your kids can be challenging and sometimes confusing.

• Easy Access Savings Accounts
• Current Accounts
• Fixed-Rate Savings Accounts
• Additional considerations when looking for a family bank account

Easy Access Savings Accounts

Easy access savings accounts can be ideal for children who are starting to learn about saving. These accounts allow you to deposit and withdraw money freely without locking it away during a period. They’re beneficial for short-term savings goals and are a good way to demonstrate how savings grow with interest.

• Who it's for: Children start to save toward specific goals but may still need access to their funds.
• Benefits: Earn interest in savings and maintain flexibility for withdrawals.
• Drawbacks: Easy access might make it tempting to dip into the savings prematurely and may not offer competitive interest rates as fixed savings accounts

Some accounts allow in-branch withdrawals and older children may link these savings accounts with a current account to transfer money as needed. These features provide additional convenience and opportunities to teach budgeting.

Current Accounts

For children aged 11 or older, current accounts offer the opportunity to manage everyday money. These accounts come with a debit card, allowing them to shop online, make in-store purchases, and withdraw cash from ATMs.

• Who it's for: Children ready to learn spending independence and financial responsibility, typically aged 11+.
• Benefits: Teaches real-world money management without the risk of overdraft facilities. Mobile and online banking features provide easy access to balances and transactions.
• Drawbacks: Some current accounts don't earn interest.

Current accounts are especially useful in today’s cashless economy, helping children understand digital money management. Parents can monitor spending habits and encourage discussions about financial decisions.

Once your child reaches 16, they can open a bank account. Some of the best bank accounts for 16-year-olds come with handy perks like discounts on driving lessons, handy savings tools and more. You may want to assist your teens in deciding what suits them best.

Fixed-Rate Savings Accounts

If you have a long-term savings goal for your child, a fixed-rate savings account could be the best option. Savings accounts require money to be locked away for a set period, often one to five years, in exchange for a higher interest rate.

• Who it's for: Parents with long-term savings goals for their children, like education or large purchases such as a car.
• Benefits: Higher interest rates can help maximize savings growth over time.
• Drawbacks: Limited access to funds during the savings period.

These accounts are excellent for teaching saving discipline and the value of earning higher returns by committing to a goal. However, they may not suit children or families needing immediate access to their money.

Additional considerations when looking for a family bank account

When considering a bank account for your child or family, you may want to consider the following:

• Your child's age: Ensure the account aligns with their financial maturity and independence level.
• Access to features: Check if the account offers mobile or online banking, which is convenient for children and parents.
• Interest rates: Compare accounts to find the best rates for savings goals.
• Fees and conditions: Be aware of any account fees or limitations that might affect your choice.
• Your long-term and short-term goals
• Consider alternatives to traditional bank accounts: You may simply want to help your kids learn about money, and some prepaid card accounts, such as GoHenry and Rooster Money Card, may be suitable.

In conclusion

Selecting the right bank account for your family depends on your financial goals and your child’s needs:

1. Easy access savings accounts offer flexibility and are great for short-term goals but may encourage spending.
2. Current accounts teach spending independence for older children but may not always offer savings options.
3. Fixed-rate savings accounts provide higher returns for long-term goals but limit access to funds.

To make the best choice, evaluate your child’s financial maturity and your family’s saving or spending needs. Comparison tools, such as the ones offered on MustCompare, can further help you find an account tailored to your family's requirements.

Finally, start as early as possible to build financial literacy for your child.