Any Current Accounts that block payments before going overdrawn?

snarffie

Hi,

My 12yo daughter has an HSBC current account and attached savings account with a debit card which is fine.  The only problem is that she could go overdrawn when she uses her card. I asked HSBC if it can be set up so that payments are blocked if they go overdrawn, and they said no.

I have a Chase account which will block any payments if they would make me overdrawn (I’m always having to top-up from savings, which is a pain, but at least prevents any charges!)  Are there any accounts like this as Chase is an 18+ only account? I don’t really want to go down the route of GoHenry style accounts.

Thanks,

snarffie

elsien

https://www.lloydsbank.com/current-accounts/all-accounts/under-19s-account.html

There's no arranged overdraft available with this account. If there isn't enough money in your account, any transactions shouldn't go through, as this account is designed to make sure you can't spend money you don’t have. If something does go wrong and your account goes overdrawn by mistake, we won’t charge you and we’ll work with you to make sure your account is put right.

snarffie

Thanks elsien,

Lloyds are pretty much the only bank I don’t want to deal with. I’ve always had bad experiences with them (online and in branch).

Probably should have mentioned that, sorry!

simongregson

The HSBC account will I am sure not deliberately let her go overdrawn - it's not in their interest and they can't charge children fees for going overdrawn or interest charges, what the banks can't prevent is a transaction at an offline terminal being presented if these are allowed on her card, or some specific situations like using her card on TFL for travel where only a minimal amount is authorised and then the full amount is debited later or on an aeroplane with no internet connection. However the chances of using a terminal that does this is fairly minimal in your daughters day to day activities.

Your chase card is the same, you just haven't encountered a situation where you have both not had enough money in the account and used an offline terminal

This is what the HBC website says:

Can my child spend more than is in their account?

No. There's no need to worry about your son or daughter racking up big bills, as they can only spend the money they have in their account.

There may be very rare occasions where we have no option but to allow a payment to leave their account despite a lack of funds. But rest assured that if this ever happens, your child won't have to pay any interest or charges because of it.

snarffie

Thanks simongregson,

That makes a lot of sense and chimes in with what the HSBC chat and phone people told me.  Yes, she can potentially go overdrawn (I didn’t fully understand the criteria, but now you’ve explained it I’m better informed than I was 👍). I was told that there isn’t a penalty for going overdrawn but a daily interest rate will be payable which I suppose isn’t the end of the world and will be fairly minimal. A bit daft though for a 12 year old.

I suppose it will teach her to be responsible. Maybe. Or it’ll at least teach me not to be so irresponsible as to let her have the card/account in the first place 🤔

eskbanker

I was under the impression that under 18s in the UK aren't allowed to be given credit but can't find authoritative support for this in a quick search....

simongregson

They won't charge interest, per the quote from the website.

People under 18 can't enter a credit agreement, so any debt couldn't be enforced. Ultimately if an under 18 managed to build up a debt with their debit card (very difficult as everything pretty much is authorised before the transaction goes though) and then refused to repay it, the bank would just have to write it off, they'd shut the account though. I'm not sure it is actually illegal to lend an U18 money, at least unintentionally.

km1500

starling allow you to set the overdraft slider to zero

LunaLater

eskbanker said:

I was under the impression that under 18s in the UK aren't allowed to be given credit but can't find authoritative support for this in a quick search....

Not quite. They can’t enter into a contract for it, so can’t be pursued through the courts.

OP, as others have said, the bank will endeavour to not allow the account to become overdrawn, but won’t stiff someone who’s sold a good or service in good faith, and may ask that she pay the excess back.

She will be under no legal obligation to do so, and will not have broken any law, but this is maybe a good opportunity to help her to start learning about budgeting.

A notebook with deposits and spending works perfectly for this, and could inculcate a habit that can be extremely valuable for adult life.

blue.peter

I have a Nationwide current account. When I accidentally took my debit card (instead of my credit card) out of my wallet to make a payment, it was declined because the payment would have taken me overdrawn.

blue.peter

snarffie said:

Lloyds are pretty much the only bank I don’t want to deal with. I’ve always had bad experiences with them (online and in branch).

You're not the only one! Lloyds is my pet hate, too.