Compare some of the best children’s bank accounts and bank accounts for kids

Children's bank accounts in Australia can be an invaluable tool in teaching your kids financial literacy and good financial habits (such as savings) from a young age. They can also just be a handy place for storing your kids pocket money. 

However, it’s easy to assume that children’s bank accounts are much more straightforward than those for adults. But kids’ bank accounts are still a financial product that come with their own sets of rules.

Here is a comprehensive look at everything you need to know about children's bank accounts.

A children's bank or savings account has a range of benefits for both child and adult, including:

• Security. Storing your child's pocket money, or even inheritance from a family member passing, into a bank account is much more secure than your classic piggy bank. 
• Interest. Like a savings account, many children’s bank accounts have a base rate or standard interest rate, as well as a bonus or maximum interest rate which can be unlocked if certain conditions are met. Some of these conditions include depositing a minimum amount of money per month or making no withdrawals in a month.
• Financial literacy. Bank accounts can be invaluable tools in teaching your kids financial literacy and good financial habits (such as saving their pocket money) from a young age. Tech-savvy young savers can also take advantage of online banking tools or educational mobile apps to help them better understand their finances. 
• Savings goals. The biggest benefit of a bank account for young savers is the ability to help them reach their savings goals. Whether they're hoping for a specific toy or dreaming of a new bike, they can watch their funds grow, and their goals get closer and closer, with a bank account.

You may be curious as to what perks kid's bank accounts come with. The main features typically include:

• Higher ongoing interest rates than adult saver accounts. 
• Access to interactive, educational apps for financial literacy development.
• Peace of mind for parents including:
  • Limited Mastercard or Visa debit card access for account holders aged 12 or under
  • No credit card access
  • Parent or guardians acting as signatory on purchases 
  • Access to statements for transparency in usage.

While everyone’s situation is different, it’s safe to say the bank accounts that reward kids for saving and depositing money regularly are generally the accounts to look for. 

It can be useful to choose a simple bank account that your child can eventually easily manage themselves. Whether this is through kid-safe internet banking, mobile banking or a helpful app designed to teach children about money, giving them some control over the account will help to boost their financial literacy. 

Some banks also offer free resources to teach kids good financial habits, including videos, online games, mobile phone apps and other activities. These extras could mean some bank accounts offer additional value to kids.

It's also important to compare the child's account conditions that need to be met to earn to earn the highest interest rate offered. This may include maintaining a minimum account balance, making regular deposits into the account, making no withdrawals or direct debits from the account and much more. 

A basic account with no account-keeping fees could be a good option to help prevent the child’s balance being eaten up by fees.

No, you do not generally need to link your own transaction account to your kid's bank accounts. Some providers may allow this, but it's typically seen as a seperate account to your adult one. 

This is by design, as the Australian Taxation Office (ATO) wants to prevent parents from using a child's savings account as a tax loop hole. There are tax rules involved with kid's bank accounts:

• No tax applies if account earns less than $120 per year in interest.
• If your child manages the savings account, they must lodge a tax return in their own name when they are under 16, make regular deposits and earn more than $420 in interest. 
• If you manage the account and make regular deposits and withdrawals for your child, then you may need to declare any interest earnings in your own tax return. This is because the interest earned on 'money gifts' deposited to your kid's bank account must be declared to the ATO. 

For more information on taxation laws for children's bank accounts or children's savings accounts, please visit this page. 

Generally, a person needs to be younger than 18 years of age to qualify for a children’s bank account, but the age limit could be lower for certain accounts. And while the money does belong to the child, a parent or guardian often needs to help their child set up their first account if they are under 14 years old. This may involve providing personal identification information, such as a birth certificate, for the application.