If you want your grandkids to become money smart, setting them up with a bank account can be a great first step. But rather than trudging down to your local high street bank to get started, why not consider applying for a prepaid debit card to help them with their everyday spending instead?
As well as being quick and easy to open online, prepaid debit cards often come with a stack of fun features for kids and you’ll be able to keep an eye on their spending too.
How do children’s prepaid cards work?
Children’s prepaid cards can be loaded with money from a parent’s or grandparent’s bank account using the mobile app that comes with the card. This means you can choose exactly how much your child or grandchild has to spend, and there’s no way they can exceed this limit. So while it gives them some financial independence, you can still monitor what they are spending, and where.
Unlike a traditional children’s bank account which can usually only be opened when the child is 11, kids’ prepaid cards can usually be opened from the age of 6.
App features vary depending on the provider you pick, but common ones include:
Real-time notifications. You receive instant alerts when the child has spent on their card.
Spending tracking tools. Many apps offer spending tracking tools to help children learn how to manage their money.
Merchant blocking. Built-in restrictions automatically block purchases at gambling sites and for age-restricted goods.
Choose how the child can spend. You can also decide if the debit card can be used at ATMs, online or for in-store purchases.
Card lock. You can lock the debit card via the app so the child can’t use it.
Scheduled transfers. Set up automatic regular pocket money transfers from your linked account.
Chore incentivisation. You can sometimes assign specific household tasks for the child to complete to earn extra cash.
Some prepaid card providers also offer a range of card designs, so your grandchild can pick the one they love most.
Just be aware that many cards come with monthly or annual fees, particularly those that offer more advanced features and tools within the app, so compare them carefully.
What you need to set up a prepaid card
To get started, you’ll usually need to download your chosen provider’s app. You’ll then need to create an account using your personal details.
Next, add the child’s details, including their name and age. There will usually be a basic identity check for both you and the child, so you’ll need to show a passport or birth certificate. Adults may also be asked to show proof of address.
You can then order the card through the app, load funds onto the card and activate it once it arrives in the post.
Alternative options
If you’re not sure if a prepaid debit card is the right choice, there are alternative options to consider to help your grandchildren manage their money:
High street children’s bank account. You could open a traditional-style bank account with a high street bank. However, your grandchild will usually need to be at least 11 years old and parental control (or grandparental control) is more limited compared to a prepaid card.
Online children’s bank account. Some online banks such as Monzo and Starling offer their own children’s accounts with lower age restrictions (usually available from age 6) and more visibility for grandparents. However, you’ll usually need your own account with the provider.
Children’s savings accounts. If the goal is to allow your grandchild to build up a savings pot for use in later life, a savings account will be more suitable as it pays interest on the balance. Children’s savings accounts can often be opened and managed by grandparents, but in some cases you will need to get permission from the child’s parents or legal guardians first.
Junior ISAs. Only parents or guardians can open a Junior ISA for their child, but grandparents can contribute to them. Up to £9,000 can be paid into a Junior ISA each tax year and your grandchild won’t be able to access the funds until they turn 18.
Bottom line
Children’s prepaid cards can be a handy way to give your grandchild some financial freedom while helping them learn how to manage money, without giving up all control over their spending.
However, it’s important to keep an eye on the costs. Some providers charge more to access different features and tools, so compare what’s included before signing up.
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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time.
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