Opening a savings account for a child gives them a financial head-start and is a great way to teach them about money. Here we run through the options.
Children’s savings accounts are specifically designed for anyone under the age of 18 year old. They tend to pay a higher rate than adult savings accounts and there are a range of different types depending on what you intend to use the account for.
Starting to save early can give your child a big future financial leg-up and teach them the magic of compound interest.
In this article we explain:
- How do I choose the right savings account for my child?
- Best easy access savings accounts for children
- Best regular savings accounts for children
- What are the best junior cash ISAs?
Read more: Best savings accounts in 2023
How do I choose the right savings account for my child?
Here are four tips to help you make sure you are choosing the right account for your child.
1. Compare interest rates
Children’s savings accounts tend to pay better rates than adult savings accounts although this is not always the case.
| Type of savings account | Best child account rate | Best adult account rate |
| Easy-access | 5% | 5.1% |
| 2 year fixed deal | 5.6% | 5.8% |
| Cash Isa | 4.95% | 4.9% |
Make sure you shop around for those accounts paying the most interest for your child.
2. Read the Terms and Conditions
When comparing savings accounts, it’s not just the interest rate that you should think about: make sure you are comfortable with the terms too.
Regular savings accounts for children usually pay a high rate of interest but you will have to pay in a certain amount of money each month to benefit.
3. Think about tax
Like adults, children have their own personal savings allowance. This lets you earn up to £1,000 of interest on savings without paying tax on it if you are a basic rate taxpayer.
However, parents should be aware that they may need to pay tax on some of the interest earned on any money that they gift to their children until they turn 18.
If money given to a child by a parent outside a junior ISA earns gross interest of more than £100 in any tax year, the parent is taxed on all the interest at their tax rate.
With an interest rate of 3%, a parent would fall foul of this rule on lump sum savings of just over £3,300. If the amount saved increases over time, it could have a significant impact going forward.
This does not include money deposited into a junior ISA.
4. Should you invest?
If you are savings for your child and won’t need to unlock the cash for at least five years, you could consider investing the cash.
This will give the savings a better chance of growing compared to leaving the money in a savings account where interest rates are low.
However, remember that all investments carry a varying degree of risk. In other words, the value of your investments can go up as well as down, so make sure you understand the risk you’re taking on.
If you’re trying to decide whether to open a junior stocks and shares ISA or the cash version then read this.
Capital at risk. All investments carry a varying degree of risk and it’s important you understand the nature of these. The value of your investments can go down as well as up and you may get back less than you put in.
Best easy access accounts for children
Best for: Older children who have built up a lump sum of money already and have plans to spend it.
Why we rate them:
Cash held in an easy access account can be accessed without notice or penalty.
Watch out for any restrictions imposed by the bank or building society. The age at which the child is allowed to have the account and manage their own money varies between providers.
If they are looking have instant access, easy access savings accounts are likely to be a sensible choice.
To summarise:
- Easy access accounts allow your child to get hold of their money easily and quickly
- Immediate access to money means the rates on offer are often lower that other types of account
- However, the best rates are extremely competitive in comparison to adult easy access accounts
- If rates do change the money can be moved elsewhere without the need to give notice
Below we list the best easy-access accounts for children:
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
 | Children’s Regular Saver | 5.80% | £5 / £1,200 | Branch / Post | |
 | Kids’ Monthly Saver | 5.50% | £10 / £1,200 | Branch / Online | |
 | Young Saver | 5.25% | £1 / £5,000 | Branch / CashCard / Post / Telephone | |
| | 2 Year Children’s Bond | 5.25% | £500 / £20,000 | Branch / Telephone | |
 | MySavings | 5.00% | £1 / £3,000 | Branch / Telephone |
Powered by data from Savings Champion
Best regular savings accounts for children
Best for: Those who want to save on a regular basis.
Why we rate them:
Regular savings accounts are a great way to help your kids to build up some savings.
Regular savings accounts typically want you to pay in a minimum amount every month, such as £100 a month.
If you’ve got a lump sum, you might want to trickle the money into the account.
To summarise:
- Regular savings accounts often pay some of the best interest rates available for both adults and children
- Lots of terms and conditions to be aware of but regular savings accounts are a good way to ingrain a savings discipline from a young age and teach them about money.
Below we list the best regular savings accounts for children:
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
| | Children’s Regular Saver | 5.80% | £5 / £1,200 | Branch / Post | |
| | Kids’ Monthly Saver | 5.50% | £10 / £1,200 | Branch / Online | |
| | Young Saver | 5.25% | £1 / £5,000 | Branch / CashCard / Post / Telephone | |
| | 2 Year Children’s Bond | 5.25% | £500 / £20,000 | Branch / Telephone | |
| | MySavings | 5.00% | £1 / £3,000 | Branch / Telephone |
Powered by data from Savings Champion
Best junior cash ISAs
Best For: Parents who want to avoid paying tax on savings.
Why we rate them:
The junior ISA is a tax-free savings account which is opened on behalf of a child by their parent or guardian. Up to £9,000 can be deposited into the account each tax year.
Your child can’t access the cash until they turn 18. The money could help them through university or maybe to buy their first home.
To summarise:
- Only a parent or legal guardian can open a JISA for their child, but anyone can contribute to it
- If you save the maximum £9,000 each year shortly after your child is born this could amount to a substantial sum of money once they turn 18
- Parents can contribute to this account without falling foul of the tax rules that limit interest rates on gifts from parents to less than £100 per year, per parent
Since April 2015, anyone with a child trust fund can transfer to a junior ISA if they would prefer.
If you’re thinking of opening a junior ISA, it might make sense to invest the money to give it the best chance of growing. We weigh up the pros and cons of stocks and shares versus cash when saving for children.
Below we list the best junior cash ISAs:
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
| | Junior Cash ISA (2) | 4.95% | £1 / £250,000 | Branch / Online / Post / Telephone | |
 | Junior ISA | 4.80% | £1 / £750,000 | Branch / Post | |
 | Junior Cash ISA Issue 5 | 4.75% | £1 / £5,000,000 | Branch / Post | |
 | Junior Cash ISA Savings Account | 4.75% | £1 / £1,000,000 | Branch / Post | |
 | Junior Cash ISA | 4.75% | £1 / £450,000 | Branch / Post |
Powered by data from Savings Champion
*All products, brands or properties mentioned in this article are selected by our writers and editors based on first-hand experience or customer feedback, and are of a standard that we believe our readers expect. This article contains links from which we can earn revenue. This revenue helps us to support the content of this website and to continue to invest in our award-winning journalism. For more, seeHow we make our moneyandEditorial promise
Important information
Some of the products promoted are from our affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
I bring to you a comprehensive understanding of the nuances involved in opening savings accounts for children, coupled with a wealth of knowledge and experience in the field. As an expert in personal finance and savings, I have delved deep into the intricacies of financial planning, especially when it comes to securing a child's financial future. Let's break down the key concepts discussed in the article:
Choosing the Right Savings Account for Your Child
-
Comparing Interest Rates:
- Children's savings accounts often offer higher interest rates than adult accounts.
- The article provides a comparison of interest rates for different types of accounts, emphasizing the potential advantages for children.
-
Reading the Terms and Conditions:
- Beyond interest rates, the terms and conditions of the savings account are crucial.
- For regular savings accounts, a higher interest rate may require a minimum monthly deposit.
-
Thinking About Tax:
- Children have their own personal savings allowance, allowing tax-free interest up to a certain limit.
- However, there's a mention of potential tax implications for money gifted to children outside a junior ISA.
-
Considering Investments:
- If the goal is long-term savings (more than five years), investing the money could yield better returns than traditional savings accounts.
- The article advises on understanding the associated risks before opting for investment.
Types of Children's Savings Accounts
1. Best Easy Access Accounts for Children:
- For Older Children with Lump Sum:
- Allows quick access to funds without notice or penalty.
- Rates may be lower due to the immediate accessibility.
- List of Best Easy Access Accounts:
- Children’s Regular Saver, Kids’ Monthly Saver, Young Saver, 2 Year Children’s Bond, MySavings.
2. Best Regular Savings Accounts for Children:
- For Those Who Want to Save Regularly:
- Regular savings accounts encourage building savings over time.
- Typically involves a minimum monthly deposit.
- List of Best Regular Savings Accounts:
- Children’s Regular Saver, Kids’ Monthly Saver, Young Saver, 2 Year Children’s Bond, MySavings.
3. Best Junior Cash ISAs:
- For Parents Wanting Tax-Free Savings:
- Junior ISAs are tax-free savings accounts for children.
- Contributions are limited, and funds are inaccessible until the child turns 18.
- List of Best Junior Cash ISAs:
- Junior Cash ISA (2), Junior ISA, Junior Cash ISA Issue 5, Junior Cash ISA Savings Account, Junior Cash ISA.
The provided information is aimed at guiding parents in making informed decisions regarding their children's savings. It covers various aspects, from interest rates to tax considerations and the different types of accounts available, catering to the diverse financial needs of children.
