What are the best children's savings accounts?
The tables below show the best children's savings accounts currently available.
Providers are fully covered by the Financial Services Compensation Scheme (FSCS) and the accounts are available nationally, although it's worth checking the rates paid by smaller building societies in your area to see if they can do a little better.
We've included the best regular savers - which set limits on the amount you can save every month - as well as top easy-access and fixed-rate savings accounts.
Monthly payments must reach your account by the 25th of each month.Transfers to Kids' Saver account after 12 months (currently pays 2% up to £5,000 and 0.2% above this).
Save £10 to £100 per month
No withdrawals allowed
|Saffron BS |
Rate drops to 0.05% if balance falls below £5; transfers to Maturity Easy Access account paying 0.25% after 12 months
|Branch, post||Save £5-£100 per month|
Transfers to Instant Saver account after 12 months; parents with a Barclays current account can access the account online/by phone on behalf of their child
Save £5-£100 per month
Rate drops to 1.51% in any month you make a withdrawal
Rates correct at September 2018.
Regular savings accounts for children
Regular savings accounts tend to pay the best rates, but access is limited and you are required to pay in money each month.
Most pay a fixed rate of interest so the rate won’t change during the term. But if the rate is variable, the lender could move it up or down at any time.
Banks sometimes reduce the interest rate if you miss a monthly payment, but none of the accounts in our table does this.
Halifax Kids' Monthly Saver - for children aged 15 or under
The Halifax Kids' Monthly Saver is now available online as well as through its branches, paying a market-leading fixed-rate of 4.5% on monthly savings of between £10 and £100 a month.
No withdrawals are allowed (you will have to close the account if you need access to the money) and the account matures into an easy-access Halifax Kids' Saver account after one year, which pays a variable rate of 2% on balances up to £5,000, falling to 0.2% over this.
Anyone who isn't a parent or legal guardian of the child, including a grandparent, will need their permission to open this account.
Easy-access savings for children
If you want your child to be actively involved, an easy-access account is the obvious choice. As the name suggests, you or your child can add and withdraw money from an easy-access savings account at any time.
Interest rates are variable and tend to be lower than that of regular savers and fixed-rate accounts, but these accounts are ideal if your child wants to save their pocket money for a specific treat.
HSBC MySavings - for children aged 7-17
HSBC pays the top rate of 3% up to £3,000 then 0.5% above this. The MySavings account must be opened in-branch with at least £10. Under 16s will need a parent or guardian with them.
MySavings comes with a cash book which can be used to pay in and take money out at any HSBC branch - under 11s must have permission and signature from a parent or guardian to withdraw or transfer more than £50.
On their 11th birthday, HSBC will also open a current account for existing customers called MyAccount.
Fixed-rate savings for children
Fixed-rate savings accounts, also known as bonds, require you to tie your money up for a specific term, typically between one and five years.
Withdrawals are generally not permitted at all, and providers that do allow you to take money out will charge a penalty.
Usually, the reward for this inflexibility is a higher interest rate - but there are only a handful of fixed-rate accounts for children on the market, and these can be beaten by the best easy-access accounts or regular savers.
Equally, some adult fixed-rate accounts are open to savers of any age, so there may be better returns available.
Action point: One-year fixed rates - find a better return on Which? Money Compare
How children’s savings accounts work
Children’s savings accounts generally work in the same way as adult ones, however, you'll need to check with individual providers to see how each account can be opened and managed.
For example, parents and legal guardians must open the Halifax Kids' Monthly Saver online or in-branch for their children (under 16s only).
Children aged 7 to 17 can open the HSBC MySavings account by themselves in-branch with just £10, although under 16s need a parent/legal guardian to accompany them. The adult must also sign for withdrawals over £50.
Is it better to save in a Junior Isa instead?
You may prefer to make the most of your child's tax-free Junior Isa allowance every year (£4,260 in the 2018-19 tax year; £4,368 in 2019-20).
Isas are an excellent vehicle for keeping savings tax-free long-term. Junior Isa money is locked away until the child turns 18 - at which point it converts to an adult Isa and the child has full control over the money.
However, in most cases your child won't pay tax on savings anyway, so it makes sense to check rates across the market.
Do children pay tax on savings?
Theoreticaly yes, however, children are entitled to income tax allowances - including the new personal savings allowance - just like adults.
That means, for the 2018-19 tax year, children would only pay tax if they earned more than £17,850 a year - made up of the £11,850 personal allowance, the £5,000 starting rate for savings and the £1,000 personal savings allowance.
This amount will increase in 2019-20, as the personal allowance will go up to £12,500. This means children would only pay tax if they earned more than £18,500 a year.
One word of warning is that money given by parents and guardians and saved in a non-Isa account is taxable if it generates interest over £100 per year (per parent). This won't apply to gifts from other family members.
We explain the '£100 rule' in our children and income tax guide.
Bank accounts for children
Current accounts aimed at children are another useful tool for developing money-management skills and can be opened from age 11.
Many pay interest on the balance - Santander pays the top rate of 3% - and there's no overdraft facility so they can't rack up debt.
Parents of under 16s can choose whether their child gets a debit card (which can be used to pay for goods in-store, online and over the phone) or a cash card (which can only be used for cash withdrawals, not spending).
Action point: Best bank accounts for children and teens - a stepping stone for under 18s