can i loan my child money

baron777

last year i came into some money and decided to put some of it, £3000 into my childs HSBC account because it was paying 2.5% interest, 
my daughter has just tried to move the money back to me and the bank have frozen her account, and wont tell us why.
am i allowed to loan money to my child, or do i have to say its a gift, and then they gift it back to me
any advice would be appreciated, thanks

elsien

How old is she? 

jimjames

You can give your child money. I assume from the rate it is a under 18s account in which case the money would be seen as hers. Loaning money to game interest rates might not really be seen as a loan by the bank.
Did you setup a loan agreement to show it was to be repaid?

Carrot007

They presumabley have frozen it as you used a minors account to store your money to gain interest. Even if you leave her this interest it is against the terms and conditions of the account.

If you have a  loan agreement it will be easier otherwise they may move on to closing all your acocunts as well.

AnotherJoe

LOL "loan".
Sounds much better than "attempted fraud" 

baron777

hi she is 14, and its a HSBC savings account rate at 2.5%,  i have just found this interesting article to prove that its not (ileegal) wont let me post the link, so i will type it. thisismoney.co.uk/money/experts/article-4025172
i accept that banks are clamping down a lot on fraud at the moment, (as people are struggling financially due to the pandemic)  but this has left me feeling like i have done something wrong, when its more likely that the banks fraud department are being hugely overcautious. 

unkle

baron777 said:

hi she is 14, and its a HSBC savings account rate at 2.5%,  i have just found this interesting article to prove that its not (ileegal) wont let me post the link, so i will type it. thisismoney.co.uk/money/experts/article-4025172
i accept that banks are clamping down a lot on fraud at the moment, (as people are struggling financially due to the pandemic)  but this has left me feeling like i have done something wrong, when its more likely that the banks fraud department are being hugely overcautious. 

If a bank see's a parent opening an account in their Childs name that is fine, all above board and quite normal for a 13 year old and for parents to be doing that. If said bank then see's at the end of the term or at another point the money being withdrawn back into the parents account it will potentially hit their system indicators and cause the account to be frozen. Especially for amounts like £3k which just happens to be the maximum amount at the higher interest rate. It will trigger the 'parent is using the child and child's name and account to store their own cash'. It may not be illegal (assuming you declare interest etc) but that doesn't mean it is within the banks t's & c's nor that you will remain a customer they wish to deal with.

I'd fully expect HSBC will at some point if they are feeling overly cautious to close any accounts you may have with them, possibly your Childs to.

baron777

so just a bit more information my daughter has has this account since she was 9, and then it became a current account when she was 11, if they wanted to close the account then thats fine, i probably would not want my daughter to be with a bank that treated her the way they have done, i dont bank with HSBC as my main account, but i do have a first direct account, which again i opened because it had a linked saver paying 3%, which i made interest from 

unkle

baron777 said:

so just a bit more information my daughter has has this account since she was 9, and then it became a current account when she was 11, if they wanted to close the account then thats fine, i probably would not want my daughter to be with a bank that treated her the way they have done, i dont bank with HSBC as my main account, but i do have a first direct account, which again i opened because it had a linked saver paying 3%, which i made interest from 

It's the fact you paid in 3k and then 'your daughter' is withdrawing it (back to your account) it is clear you have only done so to take advantage of the higher interest rate, I.e you have used someone else's account to hold your money, likely completely against the HSBC terms of the account.

As mentioned that may not be illegal on it's own, but the bank may chose to no longer have you or your daughter as a customer due to that (likely will include FD as well as they are all part of HSBC and they've been known to close all accounts under the HSBC banner, including credit cards and the like which is probably part of their current investigation). You will likely have a marker against your file as well, your daughter also, so you both may struggle to open an account with another bank.

To be safe I'd be trying to open another current account now whilst you can for both of you.

kidmugsy

I am under the impression that one can't lend money to a minor since they can't agree to repay it.  Is that wrong?

pphillips

kidmugsy said:

I am under the impression that one can't lend money to a minor since they can't agree to repay it.  Is that wrong?

No, your quite right. Children don't have legal capacity enter into loan agreements.