The best savers and Isas for children

Published by on 04 September 2014.
Last updated on 04 September 2014

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For those who are not comfortable with the idea of investing in shares, or whose children are approaching adulthood and will need to withdraw their money soon, cash Junior Isas (Jisas) offer a good alternative.

The Halifax offers the best Jisa rate of interest - 4% provided a parent also holds a Halifax Isa - at the time of going to press, while Coventry Building Society pays 3.25% and has no opening restrictions. Check product comparison sites such as Moneyfacts.co.uk, Savingschampion.co.uk or Moneywise.co.uk for the latest account deals.

Once you have exhausted your child’s Jisa allowance, there are several standard children’s savings accounts that offer even higher interest rates.The Halifax Young Saver and the Nationwide Smart Limited Access accounts both pay 3% gross.

However, savings accounts normally incur tax at the rate of 20%, which is deducted automatically by the bank or building society. Provided your child has not used up their annual personal allowance, you can ensure that your child benefits from untaxed interest by filling in an R85 form. This is usually available from the bank or building society or can be downloaded from the HMRC website at hmrc.gov.uk/forms/r85.pdf.

We asked Savingschampion.co.uk to compile the following table of best-buy accounts for kids.

JUNIOR ISA
Provider and account name Minimum Maximum Gross rate AER Type Notes
Halifax Junior Cash Isa (Linked to Adult Isa) £1 £50,000 4% 4% Variable Access in branch, apply in branch or online
Danske Bank Junior Cash Isa £25 £500,000 4% 4% Variable Access in branch or by telephone
Coventry Junior Cash Isa £1 £500,000 3.25% 3.25% Variable Access by telephone, in branch or by post
Nationwide Smart Junior Isa £1 £500,000 3.25% 3.25% Variable Access in branch. Rate is guaranteed to be at least 1.15% until 31/01/2015

 

REGULAR SAVINGS CHILDREN'S ACCOUNTS
Provider and account name Minimum Maximum Gross rate AER Type Notes
Halifax Kids' Regular Saver £10 £1,200 (a month) 6% 6% Regular savings Open in branch. No access for one year, after which account transfers to a Young Saver (3%).
West Brom Child Fixed Rate Regular Saver Issue 3 £10 £900 (a month) 3.60% 3.60% Regular savings Open in branch. No access during the 12-month term. Minimum £10 a month (maximum £75).
Dudley BS Junior Easy Saver £10 £1,800 (a month) 3.50% 3.50% Regular savings Open in branch. No access during the 12-month term. Rate falls to 1.75% after 12 months.
Mansfield Young Regular Saver £1 £500 (a month) 3% 3% Regular savings Open and access by post or in branch.Two withdrawals allowed a year.

 

OTHER CHILDREN'S SAVINGS
Provider and account name Minimum Maximum Gross rate AER Type Notes
Nationwide Smart Limited Access £1 £50,000 3% 3% Misc. Open and access in branch or online. A maximum of one withdrawal is allowed per year or the interest rate reverts to 0.75%.
Newcastle BS Newcastle Big Little Saver £1 £500,000 2.98% 3% Misc. Open and access by post or in branch.The interest rate includes a bonus of 1%, which is paid monthly if no withdrawals and a payment is made in that month.
NS&I Children's Bond (Issue 35) £25 £10,000 2.50% 2.50% Misc. Open and access by post, by telephone or online. Account has a five-year term.
State Bank of India Jumbo Junior Fixed Deposit Account £1,000 £100,000 2.86% 2.90% Misc. Open by post or in branch. Five-year fixed rate. No access within the term. Available for children aged up to and including 15 years old.

 

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