How do Prepaid Cards for Under-11s Work?

Until relatively recently, if your child was under 11 and you wanted to start teaching them about banking and managing money your options were pretty much non-existent. However, the past few years has seen pre-payment cards grow hugely in terms of functionality and popularity, and there is now a good selection of providers and schemes to choose from for children from the age of eight.

Currently, the main prepaid cards on the market for under 11s are from the following providers: RoosterMoney, Nimbl, Osper and GoHenry.

What are the Benefits of a Prepaid Card?

Giving your child a prepaid card for managing and spending their pocket money can help teach them the basics of how banking works and how to keep track of what they are spending and where. This can be really beneficial when they are ready to move to a child’s bank account, which you can do from age 11 (though if you want to continue with a prepaid card for longer they can simply move to an adult account at age 18).

Having a prepaid card also removes the need for your child to carry cash, which is all too easy to lose and susceptible to being stolen.

How Does a Prepaid Card Work?

With a prepaid card, a parent or guardian opens the account in their name on behalf of their child, and you receive a card in the child’s name. You load money onto the card, and this gives your child a balance to spend in shops and cafes in the same way as you would spend money with a debit card, with payment taken via chip and pin or contactless (as long as it’s below the £30 limit). As the adult, you can apply for cards for up to four children and they are accepted by most retailers in the UK.

Children need to be eight or older to use a prepaid card, though two of the main providers (GoHenry and Rooster) will allow you to have one for a child from age six.

The card comes with an app that can be downloaded by both parent and child. As the parent, you have full visibility of where the card is being used and you can put controls in place such as spending limits, temporary freezes and monthly allowances. You can even set up alerts so you get a text whenever the card is used.

Could My Child Run Up a Debt?

Absolutely not. The cards are not offered with an overdraft facility and they will never let a transaction go through unless funds are available, so there is no danger of them spending over their limit.

It’s also good to know that certain types of retailer are blacklisted, for example casinos, adult stores and off-licences and pubs, so the prepaid card simply won’t work in these places.

Are there Any Drawbacks?

The main thing to consider about prepaid cards is that they do have fees attached. These vary according to the provider, but typically include the following:

  • Monthly/annual fees: usually somewhere between £15 and £36
  • ATM fees: many of the cards charge a fee when cash is withdrawn from a cash machine, even within the UK. This is usually around 50p per withdrawal.

Many of the main providers of prepaid cards offer a free trial period, so this could be a good option if you don’t want to commit yourself to fees until you’ve given it a try. A comparison site could help you compare what is offered by each card and decide which one is right for you.