Mother’s Day is on March 19 and it’s a special day for children to celebrate their mums and show their appreciation for everything they do.
For parents, it's a reminder of the importance of family and it can be a good time to start planning for their children’s future.
You can start saving for your child as soon as they’re born, but with the cost of living crisis never far from our minds, that has become even more difficult.
However, most children’s savings accounts allow you to open them with as little as £1 and some accounts will allow your child to manage the money when they reach seven years old. This can help them to start having a positive relationship with money. Plus, saving a little and often can make a big difference, as by the time your child reaches 18 they’ll have a sum of money to put towards university, driving lessons or even a house deposit.
|Account type||Product name||Interest rate|
|Regular saver||Halifax Kid's Monthly Saver||5%|
|Fixed-rate bond||Saffron Building Society Two Year Fixed Rate Children's Bond||4.40%|
|Junior cash ISA||Coventry Building Society Junior Cash ISA (2)||4%|
|Instant access||Leeds Building Society Dinosaver||3.90%|
|Junior notice||Buckinghamshire Building Society Young Adult 100 Day Notice||3.50%|
To find the right account for you, it’s always best to compare savings accounts in the market. To help you out, we’ve taken a look at the different types of children’s savings accounts available:
Regular savings accounts are worthwhile if you would like to save the same amount each month for your child. There is usually a maximum amount to what you can save, but you are rewarded with higher interest rates.
Halifax Kid's Monthly Saver has the highest interest rate at 5% for a children’s savings account and it’s ideal for putting money away for a child aged 15 or under. You can also change the amount you save each month, but the maximum monthly limit is £100. The interest rate is also fixed for 12 months and the money you’ve saved will be automatically moved to a Kids’ Saver account. Remember to check the interest rate after the 12 months and move your money if there is a better interest rate elsewhere.
If you have a lump sum of money that you would like to save for your child and you don’t need to access it for a number of years, then a fixed-rate bond can be beneficial. You’ll need to lock money away for a set period of time, but it’ll reward you with a competitive interest rate.The rates are also fixed so you’ll know how much interest you’ll earn by the end of the term. However, fixed-rate bonds carry penalties for early withdrawals and it’s not normally an account where you can’t continue to add money after the initial deposit.
Saffron Building Society Two Year Fixed Rate Children's Bond is currently one of the best fixed-rate bonds in the market and it has an interest rate of 4.4%. Bear in mind, the maximum amount you can pay into the account is £25,000 and your child must be 16 or under.
A junior cash ISA is a tax-free way to earn interest on your child’s savings. It converts into an instant access ISA when the child turns 18. However, the allowance is only £9,000 (compared to the adult’s £20,000) for this tax year.
A junior ISA does allow you to add money when you need to, as long as it doesn’t exceed £9,000 each year, but you won’t be able to access the money. Your child will automatically get access when they are 18. Coventry Building Society Junior Cash ISA (2) is offering a 4% interest rate and interest is paid annually, but the rate is variable so it can go up or down at any time.
An instant access savings account for children is certainly the most flexible option but it normally has a lower interest rate. You can add and withdraw money whenever you wish, so this would work well if you plan to top up the savings as you go.
Leeds Building Society Dinosaver has a competitive interest rate of 3.9% but this can’t be opened online and you’ll need to apply in-branch or by post. The account holder must also be aged under 12 but you can save on their behalf.
A junior notice savings account is very similar to an adult notice savings account, as you’ll need to tell your provider in advance before accessing the money penalty free. The notice period can vary from seven days up until 180 days, but you’ll normally be rewarded with a competitive interest rate - although this is normally variable and not fixed.
A notice savings account is also a good way to curb any impulsive spending. Therefore, if you have older children and you would like to encourage them to be sensible with their money, Buckinghamshire Building Society Young Adult 100 Day Notice might be a good option. This notice savings account is for 16 to 18-year olds and offers an interest rate of 3.5% on up to £5,000. Your child can operate the account themselves or you can be an additional signatory, which means you’ll need to sign off any withdrawals. However, your child will still be the beneficial owner of all the money in the account.
As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.