Tips for parents as school banking programs to be banned in Victoria
With school banking programs like CBA's Dollarmites getting axed, how else can you teach your kids about managing money?
School banking programs, of which the most well known is CommBank's Dollarmites, will be banned in all Victorian public schools from January next year. A statement from the Victorian government announcing this decision said there's little evidence to show these programs teach students good financial habits that last into adulthood.
Instead, these programs will be replaced by school-led teachings on practical things like tax and how to avoid an online financial scam. These lessons will be built into the Victorian curriculum for public schools.
Interest rates not as competitive
The Victorian Government also said in its statement that "interest rates offered through school banking programs are unfairly low, resulting in students missing out on compounding interest, one of the key benefits that comes with saving money and banking."
The CommBank Youthsaver account for kids under 18, which is the account offered through its school banking program, offers a standard variable rate of just 0.05% p.a. If you deposit money and make no withdrawals, you'll earn bonus interest of 0.75% p.a.
In comparison, BCU's Scoot Super Saver Account for kids under 12 offers 1.90% p.a. with no deposit or withdrawal conditions to meet. The IMB Zoo Account offers up to 1.50% p.a. to kids under 12 when they deposit $10 a month and make no withdrawals.
Australians stick with their bank for the long term
This ban comes after industry regulator ASIC conducted its own big review into these school banking programs. At the start of its review, ASIC said it was particularly interested in how kids use the bank accounts that are opened with school banking programs later on in life.
Finder data shows almost half (44%) of Australians are still with the same bank they were with as a child; 11% say they can't be bothered to switch and 8% say it never occurred to them to switch banks.
Teaching kids about digital money
If you're a parent with school-aged kids and you're looking for different ways to help teach your kids about money, there are several apps that aim to do this. Using an app instead of physical notes and coins means they'll learn how to use and manage their money in a digital way, which is important for an increasingly cashless society.
One example is Spriggy, which is an app and prepaid card for kids aged under 17. Parents can use the app to transfer money to their kids in exchange for chores or instead of physical cash for pocket money. Kids can set themselves savings goals and track their progress in the app and access their money via the prepaid card.
ZAAP offers a very similar product for parents and kids; however, it also offers a wearable band that kids can use to make contactless payments (you can see how ZAAP compares to Spriggy here).
And just last week, popular personal finance app Revolut announced the launch of its Junior Accounts for kids aged 7-17. You can add a Revolut Junior account to your standard Revolut account and help manage their money via the app.
Are you a parent with school-aged kids? You might be interested in this piece with more expert tips on how to teach kids about money in a cashless world.