The children’s account – everything parents need to know
If you want to become a master, practice early. This also applies to dealing with finance. The earlier children learn to handle money and bank accounts responsibly, the better prepared they are to start their own business.
Most parents therefore open a child account for their son and / or daughter at a young age. On the other hand, investment and provision for children are becoming increasingly important.
However, since savings books no longer offer very attractive interest rates, fixed-term deposits and overnight deposits for children are on the rise. We offer you an extensive overview of different child accounts, as well as current accounts for adolescents, pupils, trainees and students. You can also use the account finder on the right to search for the best account for your child, view the reviews from our editorial team and close the desired account directly online.
What is a child account? And what’s in it for my child?
A children’s account is usually a checking account on a credit basis or a savings book for children, for which a bank card can be issued.
Call money accounts and time deposit accounts can also be used for savings for children. You can find out more about this under the heading "Investments for children"
The difference between these accounts is clear: the children’s current account is required, for example, to keep pocket money (pocket money account) and to teach the child how to use money.
Overnight money accounts or fixed-term deposit accounts, on the other hand, are intended for investing capital or saving money for the child (e.g. for driving license, training, study or initial setup).
Pocket money accounts are always kept as credit accounts, since children do not yet have a monthly income and so, of course, no overdraft facility can be granted. The child can only spend what money has been deposited into the child’s account.
Comparison of child accounts
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EC card credit card prepaid credit card from 7 – 24 years no account management fees no fees f. Withdrawals Online opening credit interest start credit
EC card credit card prepaid credit card from 7 – 30 years no account management fees no fees f. Withdrawals Online opening credit interest start credit
EC card credit card prepaid credit card up to 22 years no account management fees no fees f. Withdrawals Online opening credit interest start credit
EC card credit card prepaid credit card up to 30 years no account management fees no fees f. Withdrawals Online opening credit interest start credit
EC card credit card prepaid credit card up to 26 years no account management fees no fees f. Withdrawals Online opening credit interest start credit
EC card credit card prepaid credit card up to 18 years no account management fees no fees f. Withdrawals Online opening credit interest start credit
EC card credit card prepaid credit card from 10 – 17 years no account management fees no fees f. Withdrawals Online opening credit interest start credit
EC card credit card prepaid credit card up to 18 years no account management fees no fees f. Withdrawals Online opening credit interest start credit
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How old must my child be before a child account can be opened?
Depending on the type of account (pocket money account or investment), the account can be opened from the first year of life. But only under certain conditions.
According to German law, children under the age of 7 are incapable of business and can therefore neither conclude contracts nor make money transactions. The law according to § 104 No. 1 BGB says that those who are incapable of business do not have the legal power to make declarations of intent effectively and to carry out legal transactions independently.
If you already want to invest money for your child before the age of 7, you must apply for the account as a parent yourself and conclude the contract in your name. Later it would be possible to transfer the account or the investment to your child.
From the age of 7, the so-called limited legal capacity applies according to the Civil Code. This also includes the so-called "pocket money paragraph".
Due to the limited legal capacity of children from the age of 7, most banks can open a so-called child account, which is subject to certain conditions. These child accounts can usually be kept up to the age of 17. After that, the young person can decide for himself whether he wants to have a correct current account with the previous bank or whether he opts for a current account with another bank.
This depends above all on the personal situation, whether the adolescent is still in school, vocational training or university at the time and whether a monthly salary is being credited to the account or not. Depending on the individual situation and current account choice, account management fees may also apply.
How do I open a child account for my child?
Since your child is only of limited legal capacity at the age of 7, the Opening of a children’s account by the legal representative respectively. If parents live together, both parents must agree. For single parents only the legally represented parent. As proof of legal representation, you need your identity card and that of your child.
To make this overview easier for you, we have created a child account comparison that shows the most important framework conditions for the different child account offers.
Here you can easily and quickly compare which banks you have to pay account setup fees for, for example, or which bank even gives your child a small welcome bonus.
The following are important for a children’s account: following criteria:
the required payment of the child’s account should be 0 euros it should be possible to make cash payments if your child would also like to pay pocket money to the account yourself there should be no account management fees tolerated overdrafts (disposition credit) should not exist at all or should be switched off. Documentless bookings should be free of charge in the best case, interest on the credit (please also pay attention to the tax regulations)
Which dispositions can be made on a child’s account?
The offering bank and the child’s parents determine which dispositions are possible within the scope of a child’s account.
For example, it is possible that (online) transfers, cash deposits, cash withdrawals at the counter, cash withdrawals at ATMs, as well as payment with a checking card are possible.
With regard to transfer activities, the pocket money paragraph comes into play again. Transfers made by minors are effective if the minor can achieve the "contractual performance" with his own resources. Own funds are understood as the pocket money provided.
What is not possible when using a child’s account are so-called credit transactions. This is understood to mean the use of an overdraft facility and the application for an installment loan. In a few cases, it is possible for the child’s account to be granted a credit facility through the consent of the parents, but the question arises as to how sensible it is to enable such an option for a minor child or adolescent without a regular income. It is more important at this point to teach the child how to handle their own money properly and carefully without building up debts.
Account cards and bank cards for children’s accounts
With a simple bank card (no EC card) your child can deposit money into the child’s account and withdraw cash from the account. Depending on the bank, your child may have to do this at the counter or at the ATM. Payment in shops is not possible with this type of card.
Checking card / EC card
If requested by parents and children or young people, the card for the youth account can also be an EC card. In addition to depositing and withdrawing cash at ATMs, this card can also be used to pay in shops.
Credit cards are usually not issued for child accounts or youth accounts because they have no regular income and the risk of building up debts is too high.
Prepaid credit card
In addition to the child account / youth account, you can apply for a prepaid credit card for your child. These credit cards are designed in a similar way to cell phone prepaid cards. A certain amount is paid into the prepaid credit card. This is the only amount you can dispose of if you want to carry out transactions by Mastercard or VISA.
When should my child get an account??
When the time is right to familiarize your child with the use of a bank account is entirely up to the parents.
Purely organizationally – or on the part of the banks – this is usually not possible before the age of 7 anyway. It is up to you whether you open a bank account for your child when he is 9 or 14 years old.
It is generally said that it is always an advantage if children learn how to use money early on – even if it is usually only a small amount. Children can learn to handle money and their own bank account responsibly. You will learn what a transfer is and how it works. You will learn bank statements and learn how to read them and much more. In addition to learning purely organizational and technical things, you as a parent are also required to provide your child with the generally correct handling and understanding of money, credits and debts.
Can I restrict account use as a parent??
Since the contract for the child account / youth account is not only concluded between the bank and your child, but between you and the bank, parents are entitled to regulate the use of the account and even set a monthly limit for the child.
Parents decide whether the child should receive a bank card, an EC card / Girocard or, optionally, a prepaid credit card. As a parent, you also decide whether your child can make deposits and withdrawals yourself.
When can the child decide on the bank account itself??
When you turn 18, your child has unlimited legal capacity and can conclude, cancel and manage banking and contracts.
As a rule, at the age of 18, the bank’s original child / youth account is converted into a correct checking account.
Before your child’s 18th birthday, you will usually receive a letter from your bank in which a proposal to convert the account into a checking account will be suggested. You can either agree to this proposal or reject it and open a current account with another bank.
However, some banks also offer the option to keep the youth account over the age of 18. Most of the time, the young people are still in training or studying. For example, the Wüstenrot Bank has the Wüstenrot Top Giro young account, which can be kept up to the age of 24.
Children’s current account, youth account and student account – differences and similarities
Banks that offer checking accounts for children and young people sometimes refer to these accounts very differently. What is a children’s account at one bank, the other bank divides into a baby account, a student account and / or a youth account. The conditions can be very different here.
These accounts are named depending on the Age of the child or adolescent and the Framework conditions for incoming and withdrawing funds etc..
On student account is therefore never linked to a specific monthly receipt of money and usually there are no account management fees. With an account for schoolchildren from the age of 7, it is normally sufficient for money to be deposited and withdrawn from a certain bank.
It looks different with one youth account out. Let us assume that the youth account should be opened for a young person in training. Then it is very important that the youth account itself offers a few more options. It must therefore be possible for the employer to transfer the training allowance to the account. It is just as important that the young person can make transfers himself – at best via online banking. Withdrawals should also be possible free of charge at various ATMs.
For young people who want to spend a year or a few months abroad, the account should also optionally offer a (prepaid) credit card so that payments and withdrawals abroad are also possible.
Current account for children or investment and savings account for children?
In addition to the children’s account, which is intended to introduce you to everyday banking transactions and, for example, to store and manage pocket money, there are also options for financial investments and savings accounts for children.
For example, there are special daily allowance accounts for children. These are savings accounts to which sums of money can be deposited at regular or irregular intervals – or even a large sum can be deposited. The money deposit will continue to earn interest as long as it is in the overnight deposit account. The advantage: the amount of the overnight deposit account is available at all times for parents and children. Interest rates on call money accounts are not particularly high at the moment, but they can be increased if you benefit from this flexible investment.
There are some other savings options for medium and long-term investments that are currently paying a little better interest. Fixed-term deposits and ETF savings plans for your child are also an option. Savings bonds can also be an attractive investment.
Tax rules for child accounts
Tax regulations must also be observed for children and adolescents, which you as parents should keep in mind.
For child accounts and youth accounts with interest, for example, capital gains (= interest) are subject to the flat-rate tax and capital gains tax. Accordingly, 25% tax plus the solidarity surcharge must be paid to the tax office on the interest received.
Use exemption order
In order not to have to tax the mostly rather low interest income from the first euro, you can place an exemption order for your child’s account. Your child is also entitled to 801 euros in tax-free interest income or other investment income annually.
So you and your child can save taxes. A little tip: if you have opened several accounts for your child, you can also split the allowance of 801 euros per year into several accounts.
How best to approach the topic of “child account” as a parent
A child account or youth account can help not only adolescents, but also children to practice handling money under “real conditions”. However, it is always important that parents deal with the child and the newly opened account. Parental care does not end after opening an account, but goes beyond that, of course. Not only explanations are important, but also limits that should be discussed beforehand.
Questions that concern parents about the children’s account
It is usually the case that the banks themselves restrict the use of the children’s account. For example, you cannot transfer or withdraw so much from a child’s account, so that the balance of the account is in the red (= "tolerated overdraft") and it is also not possible to set up an overdraft facility.
As a parent, you can, for example, agree with the child that no more than 50 euros (or any other freely selectable amount) can be withdrawn or transferred per month, or that a certain amount remains on the account as a savings amount per month. It is best to start with small steps and evaluate the success or failure with your child using the bank statements.
If the child gets the first child account, many parents ask themselves whether it would be better to continue paying the pocket money in cash or to transfer it to the child account. The important thing is: Don’t overwhelm your child. You can also make the transition from cash to pocket money in the bank account fluent, for example by paying half of the pocket money in cash and transferring the other half to the child’s account.
This way your child can slowly practice using the account and using the cash and non-cash pocket money.
You should give your child very special support in the form of explanations and discussions in the first months after opening the child’s account. For example, talk to your child about the bank statements and explain to your child what the terms and numbers on the statements mean.
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