Children need bank accounts. They help them learn about the financial facts of life while keeping their money somewhere safe.

In the early years parents make the decisions about how and where their children are going to bank, but the best first account for the kids is the one they use and understand.

The concept of banking is complex for a young mind, so a basic transaction account from a bank with a branch near you (remember them?) is a good way to introduce the concept.

Or if, like me, you never quite get to the bank as often as you mean to school banking makes sense if it's available.

I wouldn't dream of being paid in cash or needing a printed bank statement. But with very young children paying pocket money in cash and keeping track of balances in a passbook or statement helps them understand where money comes from and how it gets into their account.


Banking and savings habits are set as young as age 7, says Kent Newman of the Banking Ombudsman Scheme.

Banks are returning to the passbook idea. Kiwibank, for example, gives children a savings booklet and stickers to be used every time a deposit is made.

Children grow up fast and at some point metamorphose into tweens and teens. Their banking products need to keep pace, says Newman.

Most banks' accounts have some sort of transition. At ANZ, for example, children with a Jumpstart account can't make a withdrawal until they're 7.

After then they can make cash withdrawals in a branch and with parental permission use internet banking and eftpos.

Once they reach 13 they have full access to accounts in their own name and at 16 can get a visa debit card.

I took the scary step when my children turned 12 to hand over the reins by allowing them access to eftpos cards and internet banking.

In theory, this is the day the children can empty a lifetime of savings and birthday/Christmas money in one fell swoop if you haven't set boundaries and discussed the consequences to them of frittering away this money.

I've read Banking Ombudsman cases where teenagers' friends have encouraged and/or pressured them to spend thousands of dollars on junk food and incredibly in one case, a car, which was promptly written off.

If they have access with an eftpos card it's essential to have more than one account and know what each is for.

This could be a short-term account for money to be spent at the dairy or on meaningless junk; medium term for big-ish ticket items such as phones, GoPros, horses, and other teenage necessities; and long-term for a car or university.

I'm also a believer in children paying a percentage of their earnings into KiwiSaver even if they don't qualify for tax credits and employer contributions.

It builds very good habits indeed.

Some parents will want more control than others on what's happening day-to-day. But offspring eventually need to learn from their own mistakes.

Hopefully that's before they Pass Go at 18 and get a student loan, access to hire purchase, and their first credit card.

As time goes on and balances grow as they should when teens get part-time jobs, it's worth introducing the concept of shopping around for a better rate.
Noticeably, none of the high street banks pay more than 1.5 per cent interest on children's accounts.

Some, such as the ANZ and ASB are paying as little as 0.10 per cent.

On the other hand, the C-operative Bank pays 4 per cent for the first $4000, and First Credit Union and Heartland Bank pay 3 per cent on savings over $1.

Teens can also learn about other forms of savings such as term deposits, Pies (Portfolio Investment Entity term deposits), and managed funds.

If they can do the research themselves they'll learn a lifelong lesson.

If you don't want to do the legwork, Canstar runs an annual award where it uses a more in-depth methodology to compare the offerings.

In 2016 ASB won that award for junior banking, Westpac won youth banking. The criteria cover the product, education, school banking and branches.

The ASB came in for praise in the Canstar report for its Clever Kash electronic money box.

The idea with Clever Kash is that the parents swipe the money from their online banking in front of the children and the balance lights up automatically on the stomach of the internet-connected Clever Kash.

It's clever in that it makes electronic savings tangible.