Question: Our son is 11 and starts secondary school in September. We want to give him a debit card to pay for the bus and any snacks he needs during the school day. Are we better to get a prepaid card or set him up with a bank account?
Answer: There is no right answer to your question as both have their merits and it depends mostly on how much you want to control your son’s spending.
A pre-paid card is controlled by you via an app. It lets you transfer cash and track where your son is spending the money. Some even let you restrict where the money can be spent.
A bank account does not offer the same level of control as once you have transferred the cash, the only way you can track his spending is to log onto the banking app and look at his account if he’ll let you.
Spending in all cases is covered under the chargeback scheme should a purchase go wrong, not arrive or the company go bust.
There are a number of pre-paid cards available for children as young as six. They are not free and expect to pay a couple of pounds a month or transaction charges if you choose this route.
These cards offer flexibility and both you and your son run the card via an app. You can link payment to chores, freeze the card if your child needs punishment and see exactly where he is spending his money.
The best known is GoHenry (gohenry.com) which charges £2.99 a month. Your son can customise the card and the app is full of money advice tailored to each age group to help teach money management skills.
HyperJar (hyperjar.com) is free but cannot be used at ATMs. You will need to set up an account and then link the ‘jars’, different accounts for different types of spending, with your son. It has also linked with a number of retail partners which give you interest on any savings you deposit there before spending in their store — for example savings for a future holiday.
NatWest Rooster (roostermoney.com) cost £1.99 a month with one month’s free trial. It also offers a free money tracking service without a card for children as young as three to learn about money.
Bank accounts for children don’t charge fees and you can get interest on any balances. For example HSBC MySavings (hsbc.co.uk) is available to 7-17 year olds. It pays 3.25 per cent interest on balances of £10-£3,000 and 1 per cent above this.
Your son gets a linked current account with a debit card, from age 11, but you can’t to control his spending from this account in any way except through the amount of money you give him. There is no overdraft facility, which is standard on these types of accounts, so he can’t overspend.
Alternatively TSB’s Under 19 account (tsb.co.uk) pays 2.5 per cent on balances of £1-£2,500 and 0.1 per cent above and comes with a debit card.
