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Best Children’s Savings Accounts

How to choose the best savings account for your child

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Written by  Victoria Russell
5 min read
Updated: 01 Mar 2024

Opening a savings account can be a great way to get kids into the habit of saving. Where’s best to start?

Opening a UK savings account for children is not only a prudent step towards securing their financial future, but it also serves as an invaluable educational tool, teaching them the importance of saving from an early age. However, with a plethora of providers and a variety of account types available, choosing the best one can be a daunting task for any parent or guardian.

This guide is designed to demystify the process. We'll delve into the workings of children's savings accounts, who can open them, and provide insights into savings limits, age requirements, and tax implications. By the end of this article, you'll be equipped with the knowledge to make an informed decision that best suits your child's financial needs.

What is a children’s savings account?

A children's savings account is a special financial product tailored for individuals under the age of 18. These accounts can be opened by parents, guardians, grandparents, or even by the child themselves if they are old enough. One of the primary benefits of these accounts is the ability to earn interest on the deposited funds, which can accumulate over time to build a substantial nest egg for the child's future.

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How do children’s savings accounts work?

Much like any other savings account, a children's savings account allows you to deposit money which then earns interest over time. These accounts can be opened for any child under 18 years of age, but it's worth noting that the child must be over seven to have the account registered solely in their name. The minimum amount required to open one of these accounts is typically as low as one pound, making it accessible to everyone.

There are several types of children's savings accounts to choose from, including easy access, regular saver, and fixed rate accounts. Each type caters to different needs and savings goals. A distinctive feature of children's savings accounts is that they usually do not pay tax on the interest earned, which can lead to more substantial growth over time. However, it's important to inform HMRC if a child earns more than £100 in interest from money gifted by a parent within a tax year, as this may have tax implications.

What are the different types of junior saving accounts?

When it comes to children's savings accounts, there's no one-size-fits-all solution. Each type is designed to cater to different saving habits and goals.

Easy access

Easy access accounts are ideal for children who want to save their pocket money or cash gifts. These accounts offer flexibility, allowing for deposits and withdrawals without stringent restrictions.

Notice account

Notice accounts typically offer higher interest rates than easy access accounts, but they require you to wait for a set period before you can access your funds. This can be a good option for teaching patience and planning when it comes to spending.

Fixed rate accounts

For those looking for certainty, fixed rate accounts lock in your money for a set term at a guaranteed interest rate, often higher than other account types. This can be a great way to save for a significant future purchase.

Regular savings account

Regular savings accounts incentivize consistent saving by requiring monthly deposits. They often offer attractive interest rates but may restrict access to the funds for a set period, such as a year.

Junior ISAs / Child Trust Funds (CTFs)

Junior ISAs and Child Trust Funds are both types of tax-free child saving’s accounts. If you’re looking to open a JISA for your child, you can invest up to £9,000 tax-free for the year 2023/24, with the money being unavailable to access until your child turns 18.

How do I choose the best savings account for my child?

Selecting the best savings account for your child hinges on your management preferences and the level of access you desire. Consider the interest rate offered and the duration of any introductory rates. A regular saver might be the best fit if you're aiming to encourage your child to deposit their pocket money regularly. Fixed rate accounts are more suited for saving towards a significant expense, like a first car or university fees. For long-term savings that can't be touched until the child is 18, Junior ISAs are an excellent option. If you anticipate needing to access the funds on short notice, an easy access account would be the most appropriate choice.

How is a children’s savings account different from a standard savings account?

Children's savings accounts share many similarities with standard adult savings accounts, but there are key differences, particularly regarding access. Access to the funds can depend on the child's age and the specific terms set by the account provider. Additionally, children's accounts may offer more favourable interest rates as a means to foster financial loyalty from a young age.

Will my child’s savings be taxed?

One of the benefits of a children's savings account is the favourable tax treatment. Children are entitled to a tax-free allowance and, in addition, they also get the personal savings allowance each year – which is an extra £1,000 in savings interest free of tax per year (for non-taxpayers). However, it's crucial to be aware that if a parent's money in the child's account earns more than £100 in interest, it will be taxed as the parent's income.

Can I make withdrawals from a children’s savings account?

Withdrawals from a child's savings account are permitted, but there's a catch: the funds withdrawn must be used for the child's benefit. Parents and guardians are not allowed to use these funds for their own purposes.

What happens when my child turns 18 years old?

Upon reaching adulthood, children's savings accounts undergo a transformation. Regular savings accounts will be converted to standard adult accounts, with new terms and conditions provided by the bank. If the savings account is a Junior ISA, it will become an adult ISA when they reach 18, and the tax-free benefits are retained as long as the account isn't closed.

How much can I deposit into a children’s savings account?

Deposit limits can vary depending on the type of account you choose for your child. For instance, Junior ISAs have an annual tax-free savings limit of £9,000.

Are my child’s savings safe?

The safety of your child's savings is paramount. If your child’s savings account is held in their name, the FSCS (Financial Services Compensation Scheme) can protect savings up to £85,000 in total across all accounts they hold with the same banking group.

Should I get a debit card for my child?

Providing your child with a debit card linked to their savings account can be a practical way to teach them about money management. These cards typically allow for purchases and ATM withdrawals without the risk of overdrafts, and they may come with parental controls for added security.

What are the alternatives to a junior savings account?

If a junior savings account doesn't seem like the right fit, there are alternatives to consider.

Children’s current account

A current account for your child can be a great tool for teaching them about money management. These accounts often come with optional spending restrictions to prevent overspending.

Junior ISAs and Child Trust Funds

Junior ISAs and Child Trust Funds are reiterated as tax-free savings options, with the funds being inaccessible until the child turns 18.

Lifetime ISA

For those over 18, a Lifetime ISA is available to assist first-time homebuyers. With options for cash or stocks and shares, the government offers a bonus on contributions, up to a maximum of £4,000 per year.

Other useful guides

We have a broad range of useful savings guides, including:

Choosing a high interest account

Everything you need to know about ISAs

What is National Savings and Investments?

Compare savings accounts with MoneySuperMarket

MoneySuperMarket doesn’t currently offer children’s savings accounts – apart from stocks and shares Junior ISAs.

But if you’re looking for a savings account we can help. We provide a choice from leading providers for easy access, notice and fixed rate accounts, and cash ISAs.

You can compare interest rates, length or term, minimum and maximum deposits and any other terms and conditions before making your choice.

Compare savings accounts