Show us the money, Mummy!
Two expert critics put cards for children to the test – Daisy, 10, and Clover, 8...
FINANCIAL journalists do not always practise what t hey preach. When I wrote an article for this paper recently on financial literacy lessons for children, I discovered my own daughters do not know their PINs from their Playmobil, much less understand the value of saving t owards a much-wanted item.
Even worse, the stash of birthday money they had received from generous relatives and friends had long been plundered to pay everyday bills, for music lessons and for sports kit. Instead of a fat pile of cash per child, I had written IOUs all over the kitchen blackboard, intending to pay them back at some point.
Financial experts suggest that opening savings accounts is the answer to creating financially literate children. According to the Money Advice Service, ‘getting kids involved early with saving helps them learn important lessons about money’, and the high street banks offer a plethora of children’s savings accounts, with many giving competitive interest rates to encourage regular saving.
There is only one problem. Children’s savings accounts do not appear to have moved on from the 1980s, and offer little to the internet-savvy pre-teen who is as likely to want to shop at Amazon as in the penny sweet shop.
According to Personal Finance Education Group (PFEG), the financial education charity that is part of Young Enterprise, children start online shopping at ten, but there are no products to help them. No high street bank operates a card account for eight to ten-year-olds. Nationwide Building Society offered my children an account with an old-fashioned passbook, a concept so irrelevant to how they will manage their money as adults to be without any educational value. They would not allow me to open it online and demanded a branch visit with bank statements and utility bills.
Nationwide says it is reviewing its position on children’ s accounts after recent feedback highlighted a shift in attitudes and increasing desire for parents to allow younger children access on these types of accounts. It says data compliance is a stumbling block.
Rival Santander, which offers a 123 Mini Account, says parents must control the account until age 11. At that point a youngster can have access to their account via a cash card or a contactless debit card.
The vacuum left by banks has encouraged alternatives from other types of provider. But they come at a price. Parents who want their younger children to learn about money through managing it themselves must pay a monthly fee to one of three prepaid card companies, Osper, go-Henry or nimbl. Each makes it easy for parents to open accounts on behalf of their children and offer apps and other technology to make them work easily.
These cards offered me what the banks would not: the chance to upload the girls’ money on to a card that they could go on to spend – and linking it to an app helping them to manage their money. It is just a shame the banks, all of whom champion financial literacy for children, are unable to provide anything sensible for this age group. My daughters Daisy, 10, and Clover, 8, tested all three prepaid cards before I made a choice. See below how they stacked up.