Delegated Spending and Connected Cards

Why might it be of interest?

When a person is vulnerable it is important to protect their money and help them manage their money and spending.  You may want them to have some independence and control over their spending or you may need someone else, eg a carer, to be able to spend money on your young person’s behalf.

How to manage this without handing over wads of cash?  I used to actually have to do this when Sophie was at residential college and initially in supported living as we didn’t have a suitable banking option and while it works it’s a bit of a pain to say the least!

The way to manage this is for the vulnerable person, and/or a carer, to have a bank card that they can use in shops, online and maybe taking out cash but with a limited amount of money available at any time and where you can track the transactions and determine how much is available on the card.

If your young person is able to manage their own money and their benefits, earned income, etc are paid into an account in their name it is theirs to manage but there are options for parents or trusted people to have oversight.

This article is primarily about delegated spending cards or connected cards which may still be appropriate for some of our more able young people but are probably what you will want to consider for young people who cannot manage their own money.

I hadn’t heard these terms until recently so I did a bit of research to find out more, primarily from the Money Saving Expert pages:  https://www.moneysavingexpert.com/banking/delegated-spending-cards/

Bank Accounts

This is a little overview of some of the typical arrangements that we parents may already have to manage our young person’s money – and the pros and cons.  If you have a Lasting Power of Attorney or financial deputyship your rights are a little different than if you do not have either of these authorities and the situations below are on the basis that you don’t have an authority.

Sole name account:  if your young person has a bank account in their sole name you do not have any right to access or manage this account.  They may well give you permission and the passwords but if they withdraw permission or change the passwords you would find yourself locked out with no right to demand access.

Joint account:  you may decide that a joint bank account with your young person would meet your needs – and it may well do so.  However, do keep in mind that a joint account connects you both financially and the actions of one of you can have an affect on the credit score of the other.  Also, any transactions on the account are the responsibility of you both so if your young person might overspend or spend unwisely, especially if they might build up a debt – that is as much your responsibility as theirs.

Using one of your own accounts solely for the young person:  this is what I have been doing – I have 2 accounts for my daughter.  One is for her benefits to be paid into and the other is her ‘spending card’.  That is one that I keep topped up with about £200 at anyone time so when she is out and about she can tap – and her carers can also use it and withdraw cash as well.  And I make any other payments needed directly from the benefits account.

This works really well.  The only downside, which was brought into focus for me recently, is that if I died these accounts would be suspended – no money in and no money out – and that would lead to a whole range of problems – all solvable, of course, but someone would have a headache sorting it out.  Not something most of you probably need to be thinking about immediately but something you should be aware of.

I have authority:  if you have a Lasting Power of Attorney (LPA) or a financial deputyship you do have the right to open accounts in the young person’s name and to manage those accounts.  You should always have more than one person with authority and while you might manage the accounts on a day to day basis the other attorney(s) or deputy(s) should be kept in the loop from time to time so they are ready to step in with the management should that become necessary.

Credit cards:  the prevailing advice seems to be not to share a credit card with anyone.  In fact, in the UK, you cannot have a joint credit card but you can have authorised users.  Authorised users can use the credit card but, and this is the key point, you, as the credit card holder, are fully responsible for the card and any transactions.  As with a joint bank account the actions of the other person could have an affect on your credit worthiness.

Delegated spending and connected accounts

The Money Saving Expert information is pretty much the only source of information:  https://www.moneysavingexpert.com/banking/delegated-spending-cards/ and also:

https://www.moneyhelper.org.uk/en/family-and-care/illness-and-disability/carers-card-accounts.

Otherwise go to individual bank pages for more information on their specific offering.

There are 2 main options for organising this – a second card on your bank account or a prepaid card.  Several banks have versions of this whereby you can have a second card on your account.

Bank options

Basically, a second card on your account but with limits and protections.  You can usually limit the amount the 2^nd card holder can spend; they can’t see your transactions; or access money in the account; and you can track their transactions.

Lloyds, Halifax, Bank of Scotland, Starling, Barclays and Santander all have options and different limits and restrictions so you will have to read up about each one individually – an overview on the MSE pages above.

With bank options your money is protected by the FSCS.

Prepaid cards

There are a number of these available and MSE reviews a few of them but do your own research as there are more options.  The main benefit here is that the young person or their carer can only spend the amount loaded on the card – no overdrafts so not overspending and on some you can set spending limits.

There may be a monthly charge and your money is not protected in the same way as in a bank account – but this may not really matter as we’re likely only talking about smallish amounts being on the card at any one time.

Direct transfer

You can, of course, directly transfer money from your account to your young person’s account and if they are able to reasonably manage their money this is a perfectly reasonable way to help them budget.  However, unless they have agreed for you to have oversight once the money is in their account you cannot track their transactions

Arms length support

Your young person may be very able to manage their money but maybe some oversight would not be a bad idea.  Various banks offer services to achieve this but sometimes require an LPA or deputyship.  Your bank may offer a ‘Third Party Mandate’ option.  The main term to google is ‘trusted person access’.

All of these options – LPA, deputyship, third party mandate – do allow the trusted person fairly extensive access to the young person’s account – more than they might like.

Another option is the ‘view only’ option – Family Connect from Hope Macy:   https://www.hopemacy.com/family-connect/.  The account holder and the trusted person need to register on the Hope Macy website.  This option basically allows the trusted person to see the transactions on the bank account – and that’s it.  They can’t make transactions or cancel transactions.  You may wonder how this helps but for our very able young people having someone else also able to keep an eye on their transactions but not directly interfere may help keep them safe, spot fraud or simply unwise spending that might lead to a conversation to improve things.