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Child Savings Account — UK Top Picks

Child savings accounts often feature higher interest rates than standard adult savings accounts. The difference is noticeable, as the interest for children’s accounts can go over 3%. However, not many people know that, so they invest in accounts with little to no potential, depriving their children of all the extra income they could have had in their name by the time they’ve turned 18. 

To help you avoid this common mistake, we’ve assembled a list of the best child savings accounts. Apart from saving more money for the future, setting up a child’s bank account can help you teach your children the importance of setting money aside and saving for university or their first home.

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What Are Children’s Savings Accounts?

A child savings account is a bank or building society account for children. The money in the account belongs to the child, but the parent or guardian usually manages it until the child reaches 18 years old. Child savings accounts typically offer higher interest rates than regular savings accounts, making them a great way to save for your child’s future.

Children’s accounts come in several forms, including easy-access, fixed-rate, and regular savings accounts. While each account has its own features and benefits, they all share one common goal — helping you save for your child’s future.

Top Kids’ Regular Savings Accounts

High liquidity is usually one of the main advantages of children’s regular savings accounts, allowing account owners to access their money hassle-free. The table below compares the best regular child savings accounts in the UK.

Service provider Account name AER Gross interest rate Restrictions Max age to open
Saffron BS Children’s Regular Saver 3.02% 3.00% Save between £5 and £100 per month 15
Halifax Kids’ Monthly Saver 2.50% 2.50% Save between £10 and £100 per month 15
Dudley Building Society Junior Easy Saver 3.50% 3.50% Save between £10 and £150 per month 16
HSBC HSBC MySavings/ Premier MySavings 3.00% on balances up to £3,000 or 0.75 on balances over £3,000 2.96% on balances up to £3,000 or 0.75% on balances over £3,000 Save as much as you’d like 17

Best Easy-Access Children’s Savings Accounts

Easy-access accounts offer the best of both worlds — instant access to your savings and a competitive interest rate. They can be helpful to families who want to be able to dip into their savings for a rainy day or an unexpected expense. Here are some of the best ones:

Service Provider Account name AER Gross interest rate Restrictions Max age to open
Virgin Money Headstart Account 2.02% 2.00% 30-day notice for withdrawals 16
Family BS Junior Saver 0.85% to 1.60% 0.85% to 1.60% Invest up to £25,000  17
Barclays Barclays Children’s Savings 1.51% 1.50% No maximum balance 17
Leeds BS DinoSaver 1.75% 1.75% The interest rate falls to 0.05% for balances below £10 11

Best Fixed-Rate Children’s Savings Accounts

Children’s fixed-rate savings accounts offer a fixed interest rate for a set period. This type of account is best suited for those who want to know how much interest they will earn in advance and don’t mind not being able to access their money during the term.

One of the best things about fixed-rate accounts is that they offer guaranteed returns, which is perfect for long-term savings goals. However, keep in mind that you won’t be able to access your money during the fixed term. Therefore, make sure to choose an account with a term that best suits your needs. Speaking of which, consider these options:

Service provider Account name AER Gross interest rate Restrictions Max age to open
State Bank of India Jumbo Junior Fixed Deposit Account 1.30%–2.20% 1.30%–2.20% Start saving with a minimum of £1,000 15
Cambridge BS Three Year Children’s Fixed Rate Bond 1.50% 1.50% £1,000 minimum investment 15

Detailed Reviews

  • Welcome Pack included
  • Regular savings updates
  • FSCS covered
  • Fixed interest rate

Children’s Regular Saver is Saffron BS’s best-selling savings account for children. The account offers an interest rate of 3.00% and allows you to make unlimited withdrawals. However, withdrawals are limited to £1,000 per day, and you’ll have to present a membership document and sign a withdrawal slip to access your money.

Children under 13 must have a parent or guardian who will act as a signatory on the account, while older minors can open an account without their parents’ help. The minimum monthly deposit is £5, and the account is best for families who save regularly.

Children’s Regular Saver can help your child form healthy savings habits from a young age, and a high-interest rate will only make your child’s savings proliferate.

Halifax
Halifax

Long-term savings

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  • You don’t have to deposit funds every month
  • Easy application process
  • You can’t withdraw money whenever you like
  • Interest is paid annually

The Halifax Kids’ Monthly Saver account is a savings account for parents who want to start saving for their children early. The account is often opened with an initial deposit of just £10, but you can deposit up to £100 each month if you want to contribute more than the bare minimum. The interest rate on this account is currently 2.50%.

Withdrawals aren’t allowed unless you’re closing the account, so this account may not be best for families who need access to their savings. However, if this limitation isn’t a dealbreaker, investing in Halifax’s Kids’ Monthly Saver account is an excellent opportunity to future-proof your child’s financial health.

The money in the Kids’ Monthly Saver is protected by the Financial Services Compensation Scheme (FSCS). Still, the FSCS protection applies only to deposits under £85,000.

  • Reliable support system
  • Withdrawals must be for the benefit of the holder
  • The interest rate is variable
  • Account upgrades are available after the child turns 16

Dudley Building Society is a UK building society that offers a range of savings accounts, including kids’ savings accounts. The Dudley Junior Easy Saver account is for children aged 0–16, and it features an attractive interest rate of 3.50%.

The account is available to UK savers living in DY, B, WS, and WV postcodes or those who already hold a Dudley Building Society savings account opened before 24/01/2022. Similarly to other child savings accounts, Junior Easy Saver requires an operator if the child is younger than 11, so if your teens want to start saving, they won’t need your supervision. In most cases, this is an excellent approach, as it gives children more freedom and teaches them how to handle money responsibly.

You can open a Junior Easy Saver account for your child via post or at the Dudley branches. With this account type, you can start saving for your child’s future with as little as £10 a month. If you want to maximise the potential of this account, you’re allowed to deposit up to £150 a month.

HSBC
HSBC

Learning the money management basics

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  • No deposit limits
  • Interest is paid monthly
  • Account management available across several channels
  • For children aged 7–17

HSBC offers two child savings accounts, MySavings and Premier MySavings. MySavings is best for children looking to save for the short-term, while the section option is for those who want to make saving money a habit. Both accounts have an interest rate of 2.96% on balances up to £3,000. The interest rate on deposits over £3,000 is 0.75%, and this approach to savings applies to both account types. 

You’ll get instant access regardless of which account you choose, and you’ll be able to make unlimited free withdrawals and deposits.

Both MySavings and Premier MySavings accounts allow holders to dip their toes into savings with £10 a month. Still, it’s worth noting that only children aged 7–17 are eligible to open either of these accounts.

These accounts come with additional goodies, such as a free money box on account opening. Children aged 7–10 will also get a free sticker activity book to help them grasp the ins and outs of saving money.

It’s noteworthy that HSBC doesn’t deduct tax from the interest your child earns, so you might want to consult a financial advisor on this matter.

Virgin Money
Virgin Money

Parents who want complete control of their child’s savings

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  • Award-winning service provider
  • Average interest rates
  • Live chat feature available to account holders
  • Ability to pay in as much or as little as you like

Virgin Money is a well-known UK bank that offers a range of financial products, including savings accounts for children. One of its most popular products is a Headstart account that allows parents to manage and monitor their child’s finances.

What’s best about Headstart accounts is that Virgin Money doesn’t charge any fees on this account. This means you can make as many withdrawals and deposits as you want without paying extra. On top of that, parents can start accumulating savings for their children with as little as £1.

Unlimited fund transfer is another reason to opt for this child’s savings account. As Virgin Money doesn’t impose any limitations on how much you can set aside for your little ones, this account is a dream come true for parents who want to give their children a solid financial foundation.

Virgin Money is covered by the FCA. So, if this company goes insolvent, up to £85,000 per person is protected.

Family Building Society
Family Building Society

Encouraging financial independence

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  • One savings account per child
  • An 8-year-old can open and operate an account
  • Rewards for those who save more
  • Tax-free interest

There’s so much to Family BS’s Junior Saver account that it’s hard to know where to start. One of the first things we’d like to mention about Family BS is that it offers savings accounts for all ages, not just for children. So, if you’re looking for a place to manage all savings in one place, this service provider might be a good option.

Family BS aims to accommodate families with different savings goals in mind. You can deposit as little as £1 up to £25,000 into your child’s account.

Junior Saver is categorised as an easy access savings account, but the Family BS allows children to withdraw funds only 12 times per year. So, as your child won’t be able to access the money as often as they’d like, it’s advisable to teach them to be careful and withdraw funds for true emergencies only.

Barclays
Barclays

High volume savings

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  • Mobile app available
  • Accounts managed by parents
  • Unlimited withdrawals
  • Online registration available

Barclay’s Children Savings account has a 1.50% annual gross rate on balances between  £1 and £10,000. Those who invest over £10,000 will earn an interest rate of 0.01%.

Barclays makes savings as convenient as possible, offering users to open and manage their accounts via Barclays Online Banking App. Parents or guardians opening a savings account for their child must be at least 18 years old and UK residents. So, unlike Family BS’s Junior Saver, Barclays accounts are managed by parents, giving them more control of the account.

One of the possible drawbacks is that Barclays’ saving rates are variable. This is not ideal for parents looking for a long-term savings solution.

Leeds BS
Leeds BS

Making the most of your savings

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  • 0.05% interest rate for balances under £10
  • Interest is calculated daily
  • For children aged 0–11
  • DinoSaver can’t be opened as a joint account

Leeds BS has an attractive offer for all parents who want to start saving for their children’s future. Its DinoSaver account for children features valuable benefits, including FSCS coverage and the option to close the account at any time without losing the earned interest.

A DinoSaver account is your best option if you want more flexibility with your investments. While some other service providers allow you to invest £10,000–£25,000, the maximum balance on DinoSaver is £1,000,000, making it one of the best child savings accounts. 

For regular cash withdrawals, Leeds BS limits account holders to £300 a day to protect children’s money from impulsive decisions. In addition, Leeds BS requires a 48-hours notice if you want to withdraw £1,000 or more from the account.

State Bank of India
State Bank of India

Locking away your child’s savings

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  • No withdrawals fees
  • Industry-standard interest rates
  • Multiple accounts for the same beneficiary
  • Deposits via electronic transfer or cheques

State Bank of India offers Jumbo Junior Fixed Deposit accounts ideal for parents investing on behalf of their children. Parents can manage these accounts by post or through the branch, and they’d have to deposit at least £1,000 to open a child’s savings account

Jumbo Junior Fixed Deposit accounts are favoured by many parents who don’t want to pay extra fees or penalties for withdrawals. What’s more, those who open a Jumbo Junior Fixed Deposit account don’t have to give the State Bank of India notice before withdrawing money.

The maximum amount you can invest in this child bank account is £100,000. This policy is quite restrictive for some parents, but most find it more than enough to save for their children’s future.

Children can withdraw money from this child savings account only after completing the account closure. Since Jumbo Junior Fixed Deposit is a fixed-rate savings account, you’ll have to lock your savings for a set amount of time. You won’t be able to close your account until the fixed term of deposit has ended.

Cambridge BS
Cambridge BS

Hassle-free investing in your children

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  • 1.50% AER/Gross interest rate
  • All money on the account belongs to the child
  • Ownership transfer after the child turns 18
  • 14-day trial

Giving your child a headstart in life has never been easier with Cambridge BS’s Three Year Children’s Fixed Rate Bond. Whether you’re a guardian, grandparent, or parent, you can take advantage of this account type to save for the youngsters.

The savings rate on Three Year Children’s Fixed Rate Bond is fixed for three years, after which the account is matured. Therefore, you will start earning interest from the moment you submit the first deposit until the day before this bond matures.

Children under 15 can open a savings account with Cambridge BS, but they need a parent or guardian to act as a signatory on the account. Cambridge BS will transfer the account ownership to the child when they turn 18. Note that your initial deposit has to be over £1,000.

How to Choose the Best Child Savings Account

Opening a savings account in the UK for your child is a big decision. After all, you want to make sure that your little one’s money is in good hands and that it will grow over time. 

With so many options on the market, it can be hard to decide which bank or building society is best for your child’s savings. With that in mind, you should consider these factors when choosing a savings account for your child:

  1. Interest rates
  2. Minimum deposits
  3. Withdrawal limits

Interest Rates

When comparing different banks and building societies, look at the interest rate they offer. Even though it’s not the only thing that matters, it’s still a good idea to compare different accounts and choose the one with the best interest rate. 

In most cases, the best savings accounts for children offer an interest rate between 0.50% and 0.75%. Still, some banks offer promotional rates as high as 3.50%.

For example, Dudley Building Society offers an interest rate of 3.50% for its Junior Easy saver account. On the other hand, the interest rate on the State Bank of India’s child’s savings account varies between 1.30% (for one year) and 2.20% (for five years). 

The difference between these interest rates is drastic, which is why you should consider all available options before making a wrong move and opening an account that won’t maximise your child’s savings potential.

Minimum Deposits

Most banks require a minimum deposit to open a savings account. Usually, the deposit is between £1 and £50, but some service providers may require a higher amount. Take Cambridge BS, for example. It’s an excellent service provider that will help you reach your savings goals and ensure your child doesn’t lack funds when transitioning into adulthood.

However, Cambridge BS requires a minimum deposit of £1,000 to invest in the Three Year Children’s Fixed Rate Bond. Foreseeably, not many people want to commit to this deal when they can, for instance, start investing as little as £1 in a Virgin Money’s Headstart account. 

So, how much money do you want to invest, and are you comfortable paying a more considerable sum of money for the initial deposit? If the answer is yes, Cambridge BS may be a suitable service provider for you.

Withdrawal Limits

Do you want to lock your child’s money away for a fixed period, or do you want easy access to it?

Keeping your children’s money hidden and secure may seem like the best option, as it guarantees that they won’t be able to spend it all in one go. However, some children may feel frustrated if they can’t access their money when they need it. 

What’s more, in case of an emergency, you may not be able to withdraw the funds yourself, so think about what would happen if you suddenly needed the money for your child’s medical treatment or any other costs. Furthermore, would you be tempted to spend investment money if the service provider allows withdrawals?

As you can see, choosing an account with withdrawal limits is a double-edged sword. It’s advisable to think this through with your partner or even consult a financial advisor before making the final decision.

Children’s Savings Accounts 101 — Everything You Need to Know to Start Future-Proofing Your Child’s Finances

Now that we’ve given you some options regarding the best child savings account in the UK, let’s dive further into the topic and discuss other important aspects of bank accounts for kids.

How Are Children’s Accounts Different From Regular Savings Accounts?

The main difference between children’s accounts and regular savings accounts is that the former usually offer better interest rates. However, generally speaking, children’s savings accounts aren’t that different from regular ones.

Most children’s accounts come with a debit card that can be used to withdraw cash and make purchases. In some cases, the account will also offer an overdraft facility.

However, there are some key differences you should be aware of, such as:

  1. Withdrawal limits — Most children’s accounts come with a withdrawal limit, which means that your child can only make a certain number of withdrawals per month.
  2. Account fees — Like regular savings accounts, some children’s accounts come with monthly or annual fees. However, you can usually avoid these charges by maintaining a certain minimum balance in the account.
  3. Interest rates — As we mentioned before, one of the main advantages of children’s accounts is that they offer higher interest rates than regular savings accounts.

Will My Child’s Savings Account in the UK Be Taxed?

Any interest your child earns on their savings below £12,570 will not be subject to tax. However, it’s important to note that this tax allowance is per person, so the interest may be taxed if your child has more than one savings account and a balance of over £12,570.

Most children won’t save £12,570 per year, so the chances of them being taxed on their savings are very slim. However, If you’re setting aside money for your children, you’ll likely reach the annual allowance fast. If that happens, calculate the taxes and don’t forget to pay them on time. 

What Happens When a Child Turns 18?

When a child turns 18, they are no longer legally considered a minor and therefore have complete control over their finances. The transfer of ownership allows them to close their savings account, withdraw all the money, or leave it in the account to continue earning interest.

If you’re a parent or guardian, you will no longer be able to manage the account on their behalf. However, you can still give them advice and help them make financial decisions if they need it.

When Should I Start Saving for My Child’s Future?

The best time to start saving for your child’s future is now. The sooner you start saving, the more time their money has to grow. For example, if you start saving when your child is born, you’ll have 18 years to save for their future. However, if you start saving when they’re 15, you only have three years to save.

Should I Invest in a Junior ISA Instead?

If you’re looking for a longer-term savings solution for your child, you may want to consider investing in a Junior ISA.

A Junior ISA is a tax-free savings account parents can open for children under 18. There are two types of Junior ISAs — Cash and Stocks and Shares ISAs. Cash Junior ISAs have a lot in common with regular savings accounts, where the money is deposited into the account to earn interest.

On the other hand, Stocks and Shares Junior ISAs invest the money in a stocks and shares portfolio. The value of this account can go up or down, depending on how the stock market is performing.

Generally speaking, Stocks and Shares Junior ISAs offer the potential for higher returns than cash Junior ISAs. However, they also come with more risk.

Wrap Up

Investing in your child and teaching them how to handle money from a young age will help them transition into adulthood and improve financial literacy. Although we’ve featured several options to choose from, we hope you’ve managed to find the best child savings account that will change the way you invest in the future. 

If you have any doubts about a child savings account, it would be best to seek help from a financial advisor or contact the bank. They will help you choose the best financial product your family is eligible for and advise you on how to create an effective savings plan.

FAQ

Do you have to pay tax on children’s savings accounts?

If the balance on your child savings account exceeds the yearly tax allowance, you will have to pay tax on the money in their name. However, if you save less than £12,570, you will be exempt from paying any fees. 

Note that most service providers won’t deduct any taxes when paying the earned interest, meaning you’ll have to take care of these matters yourself.

Can I open more than one savings account for my child?

Parents in the UK can open as many children’s savings accounts as they like. Still, some service banks or building societies won’t allow you to hold two accounts with them. Nevertheless, you can open accounts at different institutions without worrying about legal issues. 

Can I open a savings account for my grandchild?

Yes, you can open a savings account for your grandchild hassle-free. You won’t need the permission of a parent, but you’ll need to provide the necessary documentation (for example, the child’s birth certificate).