How to choose the best savings account for your child
Opening a savings account can be a great way to get kids into the habit of putting money away. There’s a huge range of accounts to choose from, here we look at how they work to help you decide which is best.
Key takeaways
Children's savings accounts can be opened for any child under 18 years of age, with the minimum opening deposit usually set at about £1
Interest earned in a child’s savings account is usually tax-free
You can choose from a range of accounts, including easy access, regular saver, fixed rate and Junior ISAs
Money in a children's savings account is protected by the FSCS up to £85,000

How do I choose the best savings account for my child?
There are lots of savings accounts to choose from for children and picking on depends on lots of different factors, such as how much you want to manage the account and how much money is being put into it. Here are a few things to consider before you choose one:
Look at the interest rate offered and the duration of any introductory rates
A regular saver might be the best fit if you want to encourage your child to start a savings habit
Do you want to invest the money, such as in an investment ISA, or would you prefer to put it away in cash?
Fixed-rate accounts can pay more in interest but you won’t have the same flexibility when it comes to withdrawing the money
For long-term savings that can't be touched until the child is 18, JISAs are an option.
If you think your child will want to access the funds within the account at short notice, an easy access account will be the best option
What is a children’s savings account?
Children's savings accounts are aimed at those aged under 18. They can be opened by parents, guardians, grandparents, or even by the child themselves if they are old enough.
The child will need to be at least seven years old for the account to be registered solely in their name.
The interest earned is usually tax free but if a child earns more than £100 in interest from money gifted by a parent within a tax year, you’ll have to tell HMRC.
How do I choose a children’s savings account?
There are lots of children’s accounts to choose from, the best for your child will depend on the following:
How much money is being saved
The age of your child
The rate of interest paid
If there is a minimum amount needed to open an account
When your child wants to access the money
How the account works – if it’s online, via an app, or operated in a branch, for example
What are the different types of account available?
The accounts available for children are similar to those for adults. These are the most common to pick from:
These accounts are ideal for children who want to save their pocket money or cash gifts. They offer flexibility, allowing for deposits and withdrawals without restrictions.
However, the AER (interest rate) is likely to be lower than an account that requires you to lock money away.
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.
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.
If you choose a fixed-rate account, you usually won’t be able to access your money before the fixed period ends. If you are allowed to access your cash early, you may face a penalty of loss of interest.
Regular savings accounts are a good way to encourage consistent saving. You put away a set amount each month and these accounts often pay high interest rates. However, there may be restrictions on when you can withdraw the money.
Junior ISAs, sometimes known as JISAs, are tax-free accounts. If you’re looking to open a JISA for your child, you can invest up to £9,000 tax-free for the year 2024/25, with the money being unavailable to access until your child turns 18.
Just like ISAs for adults, interest earned on JISAs is free of income tax and you can deposit up to £9.000 per tax year. When the child turns 18, they are then in control of the account and can decide how to spend the money.
Types of child savings accounts
Easy access
Notice account
Fixed-rate accounts
Regular savings account
Junior ISAs
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.
The minimum amount required to open one of these accounts is typically as low as one pound, making it accessible to everyone.
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.
There are several types of accounts to choose from, including easy access, regular saver, and fixed rate accounts. Each type caters to different needs and savings goals and offer varying rate of interest, or annual equivalent rate (AER).
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.
How is a children’s savings account different from a standard savings account?
Accounts for children share many similarities with standard adult accounts, but there are key differences.
The main way these accounts differ is around accessing the cash. The child may have to be a certain age before they can withdraw money, for example.
They are usually also tax-free, while with standard savings accounts interest is only tax-free up to the annual personal allowance rate.
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 are 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.
Are my child’s savings safe in a children's savings account?
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.
This offers protection if a bank or building society were to go into administration.
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:
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. The account may also pay interest on any money held within it.
JISAs are tax-free savings accounts but there are limits on how much you can put away each year. You can choose from cash JISAs or investment JISAs. The money within these accounts can only be accessed by the child when they are 18.
Alternatives to child savings accounts
Children’s current account
Junior ISAs
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 accounts for children– 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.