Saving for the future is even better when you start early, and saving for a child or grandchild can be excellent for their future. Giving children their own savings account can make them more cash aware and encourage positive savings habits.
We’ve written this helpful guide to help you understand the ins and outs of savings accounts for children.
A children’s savings account is available to children under the age of 18 to encourage them to save themselves or to save on their behalf. Children’s savings accounts can be opened by parents, grandparents, guardians, or even the child themselves if they are at least 13 years old.
These accounts can be managed by you, your child (from the age of 13), or both you and your child (from the age of 13) making saving easy for kids and manageable for parents.
Just like savings accounts for adults, children’s savings accounts can come in many different forms that serve different purposes. The types of savings accounts for children that we offer include:
Easy access accounts offer flexibility by allowing your child to deposit and withdraw funds when they please with up to 6 withdrawals per annum. There is no regular commitment to add to the account (although the account can be used in this way), which means you can save ad hoc deposits, such as on a birthday.
These types of account require regular monthly deposits, and there is a minimum and maximum amount that can be added on a monthly basis. They can offer attractive interest rates but may also restrict access to the funds in the account with a limited number of withdrawals each year. Our Young Regular Saver allows 2 withdrawals per calendar year.
A Cash Junior ISA is a tax free^ savings account for children with annual subscription limits aligned to the tax year. The subscription limit for a Cash Junior ISAs in the current tax year is £9,000. Withdrawals from a Cash Junior ISA are not allowed until the child becomes 18 years old, allowing you to set money aside as a nest egg for when they becomes an adult.
Cash Junior ISAs are an alternative to Child Trust Funds, which were closed by the UK Government in 2011.
For our Young Savers and Young Regular Savers, children over 13 can manage the money in the account themselves, and depending on the terms of the account they can take money out and pay money in. If the child is younger than 13 years of age the account must be operated by an account operator (parent, grandparent or legal guardian) on behalf of the child.
Our children’s savings accounts can be operated through the post or in branch and deposits can still be accepted through a standing order or an online payment from a UK bank account.
You can open a children’s savings account for as little as £1 for any child under the age of 18.
Savings accounts for children can be used to set money aside until they are able to begin saving for themselves or until they decide to withdraw it, such as Cash Junior ISAs that mature at the age of 18.
Opening a savings account for a child can also be a great way to get them into the routine of saving as well as encourage good habits when it comes to spending and saving.
Choosing the right savings account for your child depends on your aims and goals as well as the level of access you prefer for the child. A few points to consider when choosing a savings account for your child include:
Children’s savings accounts are similar to standard adult accounts, but they come with some important differences, especially when it comes to access.
The ability to access the funds often depends on the child’s age and the terms set by the account provider.
Moreover, children’s accounts tend to offer more attractive interest rates, designed to encourage financial habits and loyalty from an early age.
Cash Junior ISAs (JISA) are tax free^.
In addition, children are entitled to a tax free^ allowance.
Deposit limits and restrictions can vary depending on the type of account you choose for your child. For example, Junior Cash ISAs currently have an annual tax-free savings allowance of £9,000 and our other accounts have a maximum deposit of £25,000.
When a child with a savings account turns 18, their savings account is transferred to an adult equivalent for that account if the account is not closed.
For Cash Junior ISAs, the account must be closed when the account holder turns 18. The funds can be transferred into an adult ISA at that point, however the Cash Junior ISA account holder will have to complete an ISA application.
Here at Mansfield Building Society, we offer a range of different children’s savings accounts to suit your needs.
Simply browse our available savings products and find one that suits you best. If you wish to speak to a member of our savings team simply contact us on 01623 676350 or visit your nearest Mansfield Building Society branch.
Please note
This article is for general information only and does not constitute advice. For financial advice, please contact a qualified financial adviser to discuss your personal circumstances.
^ Tax free means you won’t pay UK tax on any income or capital gains your ISA makes.
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