Martin Lewis video: Which are the best children's savings accounts?
Adult savers have endured a blizzard of interest rate cuts this year, but under-16s' accounts have been more sheltered from the storm. MoneySavingExpert.com founder Martin Lewis reveals the key need-to-knows for those looking to save for children ahead of any cash Christmas gifts.
Speaking on The Martin Lewis Money Show on ITV last night, Martin explained that parents and guardians shouldn't pick accounts on their own, and should instead engage older children as it's great for their financial education. See Martin's video from his show below, as well as our Top Children's Savings Accounts and Top Junior ISA (JISA) Accounts guides for full details on they work.
The Martin Lewis Money Show – Thursday 17 December
The clip below lasts four minutes and 18 seconds and has been taken from The Martin Lewis Money Show on Thursday 17 December, courtesy of ITV Studios Ltd, all rights reserved. You can turn on subtitles by selecting the keyboard image at the bottom right of the video.
Just bear in mind that the savings rates mentioned are subject to change – check MoneySavingExpert.com's guides below for the most up-to-date rates.
Top children's savings accounts
- The top interest is for those who save each month - 3.5%. Two accounts share the top spot at 3.5% AER fixed for a year: the Halifax Kids' Monthly Saver which you can open online or in branch for up-to-15s, and the Barclays Children's Regular Saver which is branch-only, again for up-to-15s. Both let you put in up to £100 a month (you can miss months), and while you can get money out before the end of the year, you have to close the account (Halifax) or lose interest (Barclays) if you do. Full info in kids' regular savings accounts.
Martin also explains that you can use these for smaller lump sum payments too. He said: "They're not just for monthly savings; if you have a smaller lump sum - let's say you wanted to save £100, for example, for your child - well, you open one of these up because it's paying 3.5% interest, you put the £100 in in the first month, and then you don't have to put any money in in future months."
- Top rate for bigger lump sums - 3% (and debit card access available). Three accounts vie for supremacy. All offer debit cards to those aged 11+. Santander's the only one most can open online, but it only pays the most if you've a specific amount of savings in it...
- Santander 123 Mini* pays 3% AER variable but only on £1,500 - £2,000. Age 13 to 18 (0 to 18 if parent banks with Santander)
- HSBC's MySavings pays 2.5% AER variable on up to £3,000 (for those aged 7 to17).
- TSB's Under-19s' Account pays 2.5% AER variable, but on up to £2,500 (for those aged 11 to 18).
If your child has larger savings, Virgin Money (for those aged 0 to 15) pays 1.75% AER variable on up to £25,000.
All these can give debit cards from around age 11, except Virgin Money.
To get accounts offering more parental controls from the likes of GoHenry, Nimbl, Osper, RoosterMoney, and Starling Kite you'll generally need to pay a fee of at least £24 a year - see top children's prepaid cards. "The prepaid cards have more functionality [compared to a debit card]," Martin explained. "But you'll pay for it."
- Earn 2.95% on up to £9,000 a year in a Junior ISA - but the money's locked away until they're 18. Under-18s can save £9,000/year tax-free in a Junior ISA (JISA). Coventry BS pays 2.95% AER variable and allows transfers in from existing JISAs or Child Trust Funds. There are also Stocks and Shares Junior ISAs where your money isn't guaranteed but where you may end up with more in the long-run compared to a Cash JISA.
In truth, the tax-free boon of JISAs is irrelevant for all but children with big savings, with parents with very big savings, as otherwise their interest isn't taxed anyway. The real decider is whether you see the cash being locked away until they're 18 as a pro or a con. See our Top JISAs guide for more.
- Why not make the decision about where to save together with your kids? Martin says it's a great way to start to engage them with making good money decisions. Plus if they're 14+, download our free financial education textbook for them. If you're teaching them about interest remember:
- Interest is the price of money eg, 3% is £3 per £100 each year
- If you borrow money it’s what you pay, so lower is best
- If you save (you lend to them), higher is best
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