We sift through the best children's savings accounts so you don't have to
Opening a savings account for your child is not only a great way of putting aside cash for their future, it also helps them learn about saving.
There are plenty of options out there, but which is the best for your kids?
Children’s savings accounts usually work in the same way as adult ones, but in some cases they offer better rates and they often come with some strings attached.
Regular savings accounts generally offer the best rates, but require you to pay in a set amount each month.
You are not usually allowed to withdraw any money and if you do you are charged a penalty.
The highest paying account is the Halifax Kids’ Regular Saver. It pays 4.5% although you can only pay in between £10 to £100 a month.
It is fixed for a year, but you can’t make any withdrawals without closing the account. After the year is up, your money is transferred to a Halifax Kids’ Saver account which pays 2% on balances up to £5,000.
While slightly lower at 4%, Saffron Building Society’s regular saver allows you to make unlimited withdrawals. If you don’t live near a branch, you will have to operate the account by post.
If you are looking for greater flexibility and to put more away, your best option is an easy-access account.
HSBC’s MySavings account pays 3% on balances up to £3,000 and 0.75% above this. It is available to children up to the age of 17.
Another top pick is the Santander 123 Mini current account, which pays £3% on balances between £300 and £2,000. If your child is under 13, you will need to hold a Santander current account and open it for them in branch.
The Nationwide Future Saver allows you can put away up to £5,000 a year, but you can only make one penalty-free withdrawal a year.
This account has an interest rate of 3% for parents with a current account at the society, while those who don’t hold one will receive a rate of 2%.
Junior Isas (Jisas) are another great way of putting cash aside for your kids. Just like the adult accounts, everything you earn in a Jisa is tax-free.
Jisas can be opened by parents with children aged under 16 and then by children themselves when they are aged 16 and 17.
In the 2018-19 tax year, you can save or invest up to £4,368 in a Jisa. You can save for your child either in a cash Jisa, a Stocks and Shares Jisa, or a combination of the two.
The current Moneywise best buy cash Jisa is from Coventry Building Society at 3.6%, while Danske Bank offers 3.45%.
Remember, though, that money held in a Jisa is locked away until your child reaches 18.
Anna Bowes, co-founder of Savings Champion, says: “If you, your friends and family were able to gift a total of £4,368 a year to a child at the current best-buy rate of 3.6% from Coventry Building Society, you could give them more than £111,000 when they reach 18. Now that is a gift worth having.”
Halifax Kids’ Regular Saver 4.5%
This offers the highest rate of 4.5%, fixed for one year. You can deposit between £10 and £100 in the account each month.
No withdrawals are allowed so you will have to close the account to access your cash. After the year is up it is transferred into the Halifax Kids’ Saver account which pays 2%.