Children are the luckiest investors of all time because they have an abundance of something that adults do not have: time. The earlier you start to invest and save for your children, the better off they can be in the future. This short guide talks you through some of the options available.
There are three main types of savings accounts for children:
- Regular bank accounts
- Junior ISAs
- Junior pension
Kids Bank Accounts
Apps like GoHenry or Rooster Money operate as a pocket money app which lets your child access their savings and spend them on a debit card like a normal bank account. Both apps have great educational tools and games that can help them understand how money works.
These normally pay quite low interest rates as they are designed for everyday spending.
Junior ISAs
Apps like Beanstalk are great if you want to get a potentially better rate of return on your children’s savings it is also worth considering a Junior Investment ISA. Junior stocks and shares ISAs are linked to the performance of the stock market and have traditionally always resulted in better savings rates. However, it is worth noting that past performance is no indication of how the stock market will perform in the future.
Hargreaves Lansdown (which offers a free JISA) recently calculated that by investing as little Β£25 a month for 18 years this could result in a JISA of Β£10,831, assuming an annual return of 7%. This would be a huge boost for when your child goes to university, travels the world on a gap year, or starts full-time work.
- It is worth reading our interviews with Beanstalk founder Julian Robson about why investing for your children is so much more important than saving.
- For more information on JISAs you can compare the best Junior stocks and shares ISAs here.
Or, if you don’t want to take on any stock market risk, you can opt for a Junior Cash ISA.
Junior Pensions
These are known as Junior SIPPs (Self Invested Personal Pension), which really supercharge your savings for you child’s retirement, you can start investing in their pension with a junior SIPP.
If you invested just Β£240 a month from birth your childβs junior SIPP would be worth over Β£84,000 based on 5% annual returns when they reach 18.Β
If then your child didnβt make any further contributions, based onΒ compounding interestΒ of 5% when they retired at 55, their pension pot would be worth over Β£510,000 or if they didnβt retire until 65 it would be worth over Β£830,000.
However, if your child continued to invest only Β£250 a month their adult SIPP at 65 would be worth nearly Β£1.4 million.
That is quite a staggering amount of money for Β£250 a month.
Please note these returns do not incorporate account or underlying investment fees. Past performance is no guarantee of future results.
Compare Junior Investment ISAs
Junior stocks and shares ISAs (JISAs) let you invest in a tax-efficient wrapper for your children which they can only access at age 18. For the 2025/26 tax year, you have until 5th April 2026 to invest up to Β£9,000 tax-free for each of your children.
Compare Junior SIPPs
Junior SIPPs are a self-invested personal pension product for under 18s. This type of pension account offers a tax-efficient way of saving for your childβs retirement as when your child reaches 18 it turns into a regular SIPP.
How do Children’s Savings Accounts work?
Childrenβs savings accounts are simple cash accounts with a low minimum savings amount β typically Β£1. Some providers will allow children to operate their savings account themselves, with a parent or guardian as a signatory.
Just as with adult accounts, you can from choose easy or instant access, fixed-term bonds which lock money away for a few year, or regular savers where you must pay in each month for a year without making withdrawals.
The Junior ISA (JISA) is a savings account for children which sits within the ISA tax wrapper. Children have tax-free allowances just like adults and, as of the 2024/25 tax year, they donβt pay tax on the first Β£18,500 of income.
The JISA limit more than doubled this tax year, so you can now save up to Β£9,000 a year tax-free. You can choose a Cash or Stocks & Shares version of the JISA depending on whether you want to save or invest. Any adult can open and pay into one on behalf of a child, but the account will be in the childβs name, and they can make withdrawals once they turn 18.
The Junior ISA replaced the Child Trust Fund, another type of tax-free account which is no longer open to new savers, although you can keep paying into your account if youβve already got one, or transfer it into a JISA.
Another savings option could be Premium Bonds, where you donβt earn interest but instead you get the chance to win prizes. You can even set up a pension for a child that they can only access at age 55, under current rules.
- Further reading: Which are the best bank accounts for your children?
Pros and cons of children’s Savings Accounts?
Interest rates are usually pretty good on childrenβs accounts – you can find deals that beat the equivalent adult savings accounts. Rates will not automatically be higher in fixed-term accounts for children though, so compare products carefully.
Some accounts come with a debit card so you can help older children learn more about banking and how money works.
The main advantage of a Junior ISA is that itβs tax efficient, and β this could be a pro or a con depending on your perspective β the cash is locked away until the child turns 18.
Balances in childrenβs savings accounts of up to Β£85,000 are covered by the Financial Services Compensation Scheme in the event a regulated provider goes bust.
On the downside, as a parent or step-parent, youβll pay tax at your top rate on interest earned above Β£100 (above your personal savings allowance) on savings in a childβs name unless you save into an ISA.
The regular savers paying the highest rates tend to limit what you can put in each month, so if you want to save significant sums, you may need to spread the money across several different accounts.
- Interested in switching your bank account for a reward? Compare the best bank account switching offers here.
Alternative Savings AccountsΒ
Savings Platform | Best Rate | Savings Accounts | Minimum Deposit | Customer Rating | More Info |
---|---|---|---|---|---|
![]() | 4.85% | 80+ | Β£1 | 5.0
(Based on 2 reviews)
| See Rates |
![]() | 4.68% | 60 | Β£1,000 | 3.8
(Based on 1,760 reviews)
| See Rates |
![]() | 4.60% | 60+ | Β£10,000 | 5.0
(Based on 2 reviews)
| See Rates |
![]() | 4.85% | 30+ | Β£1,000 | 4.2
(Based on 1,094 reviews)
| See Rates |
You may also be interested in these other types of savings accounts:
