Best Children's Savings

Teach your kids to save at up to 4.5% interest

Children can earn up to 4.5% in the top savings accounts – yet many have cash in accounts paying dismal amounts, depriving them of interest and the lesson that your money can work for you. This is a guide to the top-paying children's accounts, including how to use their tax-free allowance for your gain.

Tips on teaching kids to save

The simple money lesson for younger children is obvious – put your cash in the bank and it'll grow. Yet as they get older there's another lesson to be learned - a bank's job is to make money from you, our job is to try to keep our cash.

So here's some top tips for helping kids learn and understand about saving.

  • It depends – mostly on whether your kids pay tax now (almost all don't), and whether you want to lock the cash away, or retain more control over it.

    If your kids don't pay income tax (child prodigies watch out!) then they'll be able to earn £17,850 in saving interest before having to pay tax on it, meaning that a junior ISA isn't really necessary.

    But, if they'll have high levels of savings once they turn 18, a junior ISA could be a good plan, as these convert to full cash ISAs when the child turns 18, meaning they remain permanently tax-free.

    Junior ISAs lock cash away until the child turns 18 – at which point it's their money. With the savings in this guide, most allow access at any time, giving you more control.

    See the Junior ISA and Child Trust Fund guides for more info on whether they're right for you and for best buy accounts, or see Do kids pay tax? below to help you decide.

  • Here's a handy simple explanation: "Put your cash in a piggy bank and it sits there. But put it in a real bank and you're actually lending them your money – so they need to pay you for it.

    "The amount you're paid is called interest. The higher the interest on savings and the longer you keep it with them, the more they are paying you. If the interest is 10%, that means they pay you 10p a year for every £1 you save with them."

  • Look through the best buys together, explaining accounts' pros and cons (if you're unsure, see Interest Rates For Beginners and make the decision together). Better still, go to your local bank or building society, get your child to ask for an account there and compare its deal with the best here.

  • Explain that many banks try to tempt you in with freebies, but often they're the ones that don't pay good interest. So pick an account for interest, then discuss opening other accounts with just the minimum balance to grab the freebies.

  • If you go for an easy-access or variable-rate deal, put your child in charge of checking the interest every month to see if it's still paying a decent rate. Move it if not.

  • It's an interesting discussion to have with children. There's a balance here. A piggy bank is kept at home where you can see it, though it can be stolen (don't say that if it'll scare them). Yet money in the bank is safe and earns interest, but there's a very slight risk the bank may collapse.

    If it does, provided it's a UK-regulated account (all those listed below are) the money is protected up to £85,000 per person by the Government, which is as safe as we can hope for. See the Safe Savings guide for more about how savings are protected.

  • One easy trick is to defer an element of pocket money to show the extra reward from savings. For example, if their pocket money is £3, give them half for spending and half for saving. Then tell them for every pound they save, you'll give them an extra one at the end of the year as a reward. For more tips, see Martin's blog: Give pocket money as pay.

  • Unfortunately there's no straight answer as banks aren't consistent across their own accounts. For example, Barclays has at least four different children's savings/current accounts, each open to different age ranges and each allowing children to open/control the account at different ages.

    The same is true across all the banks – there's no consistency.

    Here's a few examples just to show:

    Skipton BS Leap account For 0-17 yrs. Child can open/operate if 8+. Needs an adult trustee to open/operate if under 8. Child cannot keep the account past the upper age limit. The money will be transferred and the account closed.

    HSBC MySavings account For 7-17 yrs. Child can open/operate but needs an adult trustee to withdraw £50+ if under 11. Child cannot keep the account past the upper age limit. The money will be transferred and the account closed.

    Barclayplus Children's account For 11-15 yrs. Child can open/operate. Child cannot keep the account past the upper age limit. The money will be transferred and the account closed.

    Nationwide FlexOne current account For 11-17 yrs. Child can open/operate. Once open, child can keep account until 23 yrs.

    Don't feel that you should let your child open or operate an account just because they are old enough to. While it's a great way to teach your child cash management, only you can know when your child is ready for the responsibility.

  • If you have kids under the age of 18 then a card could be a great alternative to cash or savings to teach them how to spend wisely. Plus, you can set spending limits and monitor what your child is spending on, giving peace of mind too.

    Our new guide: Top cards for under-18s, helps you understand the two main alternatives – prepaid cards and cards that come with children's bank accounts – plus the advantages and disadvantages of each, and why a card could be useful for your kids (and for you!).

  • These tips are just the start. For more, see the Free Teen Cash Class PDF, Martin's MoneySaving tips for nine-year-olds blog (and ensuing discussion), the Things teens need to know about cash discussion and the full Financial Education Campaign section. You should also check you're with the best Child Trust Fund or junior ISA if you have these accounts.

Do children pay tax on savings?

There's a common myth that children don't pay tax but they're actually taxed in exactly the same way as adults.

Yet most children don't have jobs or earned income. And for the 2018/19 tax year, if they've no income they can earn up to £17,850 from savings without paying tax on it (that's the £11,850 personal allowance + £5,000 starting savings allowance + the £1,000 personal savings allowance).

Even if they do have income to pay tax on, the personal savings allowance (PSA) means basic-rate taxpayers can earn £1,000 of savings interest tax-free.

Yet there is one fly in the ointment...

If money is given by a parent or step-parent (not grandparents etc) and the interest is over £100/year from non-ISA savings the whole thing is taxed like it's the parent's cash.

The £100 allowance is on a 'per parent' basis, rather than a 'per child' basis. The aim's to stop parents using their kids' tax-free allowance for an extra allowance.

  • Once the child earns more than £100 per parent, the whole lot is taxed at the parent's tax rate. Yet even then, if the parent is within their personal savings allowance and the child's savings don't take them over, then it'd still be tax-free.

    Yet if the child goes over the £100 limit and the parent is over the PSA then their savings would be taxable, in which case saving it in a junior ISA would be a tax benefit, as then it's tax-free.

  • In theory, yes – HMRC says there's nothing legally stopping you. But in practice, many banks – including those detailed here – require the named account holder to have UK residency as part of their T&Cs, which will make it difficult.

    The only thing to watch for is inheritance tax, if you have substantial wealth. But assuming this isn't too large a sum of money, you should be able to give it away in the future without too many problems.

Top children's regular savings accounts

Regular savings accounts require you to put a minimum amount of money away each month. In return, they often pay much more interest – and at present, the top pick's interest smashes all other best buys.

If you miss a month or need to withdraw cash you'll often lose the rate, so only consider this if you're sure you'll be able to pay cash in during the time period. For a more detailed explanation of how the interest works and pros and cons, read the full adults' Regular Savings guide.

Earn a top 4.5% rate for one year, but no withdrawals allowed in that time

The Halifax Kids' Monthly Saver pays 4.5% AER fixed for a year, the top payer, but it doesn't allow any withdrawals during the term – though if you do want to access your cash early, you can close the account.

Need-to-knows

  • You can open the account online or in a Halifax branch (it can't be opened in Bank of Scotland branches). Access to the account is online, by phone or in branch.
  • You're allowed to save £10-£100 each month, but if you decide to skip a month there's no penalty.
  • At the end of the 12 months, the money in your account will be transferred to a Halifax Kids' Saver account (see below). The Monthly Saver will remain open and you'll earn whatever rate applies at that time on new money added (as long as your child is still 15 or under).
  • Halifax shares its £85,000 UK savings safety guarantee with the rest of the HBOS Group, including Bank of Scotland, AA, Saga and BM Savings.

Rate: 4.5% AER fixed for 12mths
Min deposit:
 £10/mth
Max deposit: £100/mth
Access: 
Online/phone/branch
Missed payments allowed: 
Yes
Withdrawals allowed during the term:
 No
Min age to open it:
 0
Max age:
 15

Slightly lower interest at 4% but you can make unlimited withdrawals

If you can agree with your child to put £5 or more aside most months, the Children's Regular Saver from Saffron BS pays 4% AER fixed for a year, and allows withdrawals from the account. You'll need to operate the account by post unless you live near a Saffron branch.

Need-to-knows
  • You can save any amount between £5 and £100 each month, though there's no penalty if you miss a pay-in.
  • Children under 13 must have an adult to operate the account for them.
  • At the end of the 12 months, the account will turn into a Maturity Easy Access account, paying just 0.25% interest.
  • Saffron BS has the full £85,000 UK savings safety guarantee.

Rate: 4% AER fixed for 12mths
Min deposit: 
£5/mth
Max deposit:
 £100/mth
Access: 
Post/branch
Missed payments allowed: 
Yes
Withdrawals allowed during the term:
Yes
Min age to open it:
 0
Max age:
 15

Also 3.5% interest BUT you can't make withdrawals 

The Children's Regular Saver from Barclays pays 3.5%, so less than the Halifax and Saffron accounts above but it's a good option if there's no Halifax branch nearby, but you do have a Barclays (or you already bank with Barclays).

Need-to-knows
  • You can save any amount between £5 and £100 each month, though there's no penalty if you miss a pay-in.
  • The rate drops to 1.51% for a month if you make a withdrawal, so try to keep these to a minimum.
  • The rate is fixed for 12 months – after this the account will be converted into an Instant Saver account, which probably won't pay as good a rate.
  • An adult must open the account for children aged under 16.
  • If you've a Barclays current account, you can access the account online or by phone on behalf of your child.
  • Barclays has the full £85,000 UK savings safety guarantee.

Rate: 3.5% AER fixed for 12mths
Min deposit: 
£5/mth
Max deposit: 
£100/mth
Access:
Branch only
Missed payments allowed:
 Yes
Withdrawals allowed:
Yes, but rate drops
Min age to open it:
 0
Max age:
 17

Top children's easy-access accounts

If you don't fancy the regular savers, or have filled them, next best is a choice between...

  • The top easy-access children's savings accounts, where rates can change both with the Bank of England's base rate and as providers change their competitive stance, or...

  • The top fixed savings, which give a guaranteed rate for a set period, but you can't take your money out during that time. These can be great for certainty on your return, but are only suitable if you're happy to lock cash away for the entire term.

We've plumped for the top easy-access deals next as rates are slightly better, but go with whichever suits you best. It's also worth checking local building societies, which can sometimes have deals paying decent rates.

New. Pays up to 3.5% on £5,000 a year, but limited withdrawals

If you've a child under 15, you can open a Nationwide Future Saver. It pays 3.5% AER if you've a main Nationwide current account (see the need-to-knows below), or 2.5% AER if you haven't. You can save up to £5,000 a year.

However, to earn the headline rate of interest you can only make one withdrawal per 'account year' – make more than this and you'll earn just 0.5% for the rest of the year.

Need-to-knows
  • You must open the account in branch unless you or your child already have an account with Nationwide.
  • You must have parental responsibility for a child who is aged between 0-15. Your child can hold the account until they're 18 years and 6 months old.
  • A 'main current account' can be a Nationwide FlexOne, FlexStudent, FlexGraduate, FlexDirect or FlexPlus account. 
  • If you don't have a 'main' Nationwide current account, you can earn the top rate if you've a FlexAccount and have been paying in £750+ for three months or have switched to a FlexAccount within the past four months.
  • Nationwide BS has the full £85,000 UK savings safety guarantee.

Rate: Up to 3.5% AER variable on up to £5,000/yr
Min/max deposit:
£1/£5,000 (per year)
Access: 
Online or branch
Withdrawals allowed: 
One/yr (for top rate)
Min age to open it:
0
Max age:
15

Pays 3% on up to £3,000 and allows unlimited withdrawals

The HSBC MySavings account pays a decent 3% AER. It's ideal if you'll need access to the money as you can make unlimited withdrawals, but you only get the top rate on the first £3,000 in the account – so if your child's a big saver, then look at the accounts below.

Need-to-knows
  • If your child's 7-17 they can open the account – though under 16s need a parent/guardian with them.
  • While the child is under 11, the adult trustee's permission is needed to withdraw £50 or more.
  • Once the child reaches 11, they get a MyAccount, which comes with a Visa debit card.
  • You'll need to open the account in branch, but once open it can also be operated over the phone. Once your child reaches 11 and gets a MyAccount, it can be operated online as well. 
  • Children aged 7-10 get a free moneybox (some get a sticker book too) when you open the account.
  • HSBC shares its £85,000 UK savings safety guarantee with First Direct.

Rate: 3% AER variable up to £3,000; 0.75% above that
Min deposit: 
£10
Max deposit:
Unlimited
Access: 
Online, phone or branch
Withdrawals allowed:
Yes, unlimited
Min age to open it:
7
Max age: 
17

Pays 3% on £300 to £2,000 and comes with a debit card for those aged 11+

The Santander* 123 Mini Current Account pays a decent 3% AER if you have £300 to £2,000 in it. It's a good way to teach your kids about managing money as they can operate the account themselves and get a debit card or cash card from age 11.

If you're a parent or guardian for a child under 13, you need to have a Santander current account and open the account in trust for your child. If you want to, you can then transfer the account over to them after their 11th birthday, which is when they'll get a card to use.

Need-to-knows
  • As it's a current account, you can make unlimited withdrawals from it.
  • If your child's aged 13+, they can open the account online, by phone or in branch. Accounts in trust must be opened in branch.
  • You only get the 3% interest if you've £300 to £2,000 in the account. If you've £200 to £299 it's 2%, and for £100 to £199 it's 1%. Rates apply to the entire balance.
  • Santander has the full £85,000 UK savings safety guarantee.

Rate: 3% AER variable if you've £300 to £2,000; 2% under £300; 1% under £200; nothing below £100 or above £2,000
Min deposit: 
£1
Max deposit:
Unlimited   
Access: 
Online, via the Santander app, phone or branch
Withdrawals allowed:
Yes, unlimited
Min age to open it:
 13 to open themselves
Max age:
 18

Earn 2% & allows unlimited withdrawals

If you're looking for an easy-access savings account where you don't need a current account with it, the Halifax or Bank of Scotland Kids' Saver account pays 2% AER without any bonuses and allows unlimited withdrawals.

Need-to-knows
  • The account can be opened online or in branch, and can also be managed by phone once opened.
  • You can make as many withdrawals as you like, there's no penalty.
  • You can save up to £5,000 at the 2% rate, above that the rate drops to 0.2%.
  • Interest's paid monthly.
  • Halifax shares its £85,000 UK savings safety guarantee with the rest of the HBOS Group, including Bank of Scotland, AA, Saga and BM Savings.

Rate: 2% AER variable up to £5,000; 0.2% above that
Min deposit:
 £1
Max deposit: 
£5,000
Access: 
Online/phone/branch
Withdrawals allowed:
Yes, unlimited 
Min age to open it: 0
Max age: 15

Top children's fixed-rate savings accounts

The longer you fix for, the more you are RISKING the fact that an unpredictable future means this could be a bad choice. If interest rates were to increase rapidly, you would lose the flexibility to ditch and switch to a better payer.

It's also worth checking the adult fixed rate accounts, as some have no minimum age requirement. So you can open an account for your child, with you as the trustee.

Earn 2.05% for two years if your child has at least £1,000 saved

The Kent Reliance two year fixed rate bond pays 2.05% AER fixed for two years and has no minimum age – making it a good option to use as a children's savings account.

While the rate is lower than the Cambridge account above, the fixed term is a year less so could be a better option. Unusually for a fixed savings account you can also access your cash or close your account early – though there's a hefty 180 days' interest penalty on anything withdrawn.

Need-to-knows
  • The account can be opened by a parent or guardian, who must be in charge of it until the child reaches 7.
  • You must open the account online, by post or in branch.
  • You can deposit a maximum of £1 million.
  • Early withdrawals and account closures are permitted subject to 180 days' loss of interest.
  • Interest is paid annually or monthly.
  • Kent Reliance has the full £85,000 UK savings safety guarantee.

Rate: 2.05% AER fixed for two years 
Min deposit: £1,000
Max deposit: £1 million
Access: Online, phone or branch
Withdrawals allowed during the term: Yes, subject to penalty
Min age to open it: 0
Max age: N/A

Earn 2% if you're willing to lock it away

The Cambridge Building Society pays 2% AER fixed for three years on balances from £1,000 to £20,000, though you can only make one deposit and can't add to it.

Think carefully before getting a fixed account, as rates are higher on the accounts above – the only reason to open this is to lock the cash away.

Need-to-knows
  • The account can be opened by a parent or guardian, who must be in charge of it until the child reaches 18.
  • You must open the account by post or phone.
  • You can deposit a maximum of £20,000.
  • Early withdrawals and account closures aren't permitted.
  • Interest is paid annually on 31 December.
  • Cambridge BS has the full £85,000 UK savings safety guarantee.

Rate: 2% fixed for three years
Min deposit: £1,000
Max deposit: £20,000
Access: Branch or post
Withdrawals allowed: None
Min age to open it: 0
Max age: 15

Check your local building society too

Local building societies often pay very decent rates too. Check for offers for existing customers' children or for those living in the local area.

For a full list of children's savings accounts use the MoneySupermarket* and Moneyfacts  comparisons, in conjunction with the Savings Safety guide to examine the protection for any accounts. However, with these it's crucial you double-check the rates on the banks' own websites before applying, as these comparison tables are NOT continually updated.

Use your child's tax-free allowance

'Using your children tax-efficiently' sounds slightly callous. But if you are better off, so are your kids. Saving money in a child's name means you often save at a higher rate of interest. It's perfectly possible to have one account for your child to put their pocket money into, and another for any larger amounts.

The personal savings allowance (PSA) – where basic-rate taxpayers can earn £1,000 interest each year without paying tax (£500 for higher-rate payers, nothing for additional-raters) – has made this less of an issue, but it's still worth considering if you're close to maxing out your PSA.

There are two things to consider...

  • If it's their own money, children can earn the same £17,850 a year in interest as adults before it gets taxed. However, don't assume you can dunk fortunes in your kid's name.

    If a child generates more than £100 interest in the course of the year, from money specifically given by each parent (or step-parent) (so £200 for a couple with a child), this income falls under that parent's PSA – and if they've used theirs up then it'll be taxed at their rate.

    In practical terms this means you could put up to £7,980 in the 2.5% top paying children's account (£3,990 per parent), and it wouldn't be taxed, as that would generate around £99.50 each. Just to clarify, this doesn't mean £7,980 every year; it's the interest generated from all cash given in this and previous years.

    One way around this is with junior ISAs, where £4,260 can be saved in the child's name and is free of tax regardless – read our full Junior ISA guide.

    Also these rules only apply to parents, not grandparents, aunties, uncles or friends. They may all give your children as much as they like and, providing it's a genuine gift, it counts as the child's money without a £100 limit.

    The only other tax implications of making cash gifts is the possible spectre of inheritance tax if the donor dies within seven years of making it.

    A warning for bright sparks thinking: "If I gave my brother's kids £20,000 and he gave mine the same...?" Good thought, but no cigar. If HM Revenue & Customs spots you, you're in trouble.

  • It's worth remembering if the money's in your child's name, it's your child's cash. Yet if you're worried that by putting £1,000 in their name they'll splash out on 52 ringtones, an Xbox and enough sweets to give a junior school a sugar rush, don't be. Many accounts will allow the adult to stay in control of the cash until the child turns 16. When they do, the cash is technically theirs to do with what they wish.

    Most banks require a child to be at least seven before they can open an account for themselves, though they do all differ, so it's always worth checking the specifics. Under-sevens require a parent, guardian or grandparent to set up an account and act as signatory.

    This method can also be selected for older children. If it is, then usually until they're 16 the signatory can still manage and withdraw the cash without the child's approval. Many accounts have terms and conditions stating withdrawn money must be used "for the benefit of the child," but of course, this encompasses a wide variety of definitions.

The size of the saving

For calculating the interest on children's savings, we've assumed your child won't pay any tax on their interest.

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