Best Option When Saving For A Child’s Future | will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be Scamsmart.

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Derin Clark

Derin Clark

Online Reporter
Published: 01/11/2021

It is never too early to start saving for your child’s future, but with so many different types of savings accounts available it can be difficult to decide which is the best option. To help parents, or grandparents, choose the right option when saving towards a child’s future, we’ve highlighted some of the best children’s savings options.

Children’s saving account

A common option when saving for a child’s future is to do so via a children’s saving account. These accounts are similar to adult savings accounts, although they often pay better interest rates than the adult versions. As with adult savings accounts, there are children’s easy access accounts and fixed rate accounts to choose from. As well as this, money deposited into a children’s savings account is covered by the Financial Services Compensation Scheme (FSCS) if the provider has a UK banking licence. When looking at children’s savings accounts, it is important to consider that some accounts have restrictions, especially when it comes to making withdrawals. As well as this, although most children will not have to pay tax on their savings, these accounts are not tax-free so if there is a chance that the savings will be taxable, tax-free alternatives may be a better choice.

The money needed to open a children’s savings account can vary. Some can be opened from just £1 and allow further additions to be made, while others will require a higher initial deposit and, if a fixed account, may not allow further additions. Usually, when the child reaches 18 they will have full control over the account and will be able to withdraw funds.

Junior ISAs

Junior ISAs (JISAs) allow up to £9,000 to be deposited tax-free during the 2021/22 tax year. There are two types of JISAs – cash JISAs and stocks and shares JISAs. Cash JISAs are similar to adult cash ISAs, in that they work much the same way as a standard savings account but have the tax-free benefit. Meanwhile, stocks and shares JISAs invest the money deposited into the stock market, which can result in these JISAs earning a better return than cash JISAs, but it is also a much riskier option that can result in losing all the money deposited.

Generally, a stocks and shares JISA can be a good option for those saving for the long-term, usually 10 years or more, and who will not need to access the money during that time. These JISAs are riskier, however, and it is important to research stocks and shares JISAs before investing to ensure that it is the right choice.

To retain the tax-free benefit of a JISA, money should be transferred between accounts and not withdrawn. This includes when the child turns 18, at which time their JISA will automatically transfer to an adult cash or stocks and shares ISA.

Premium bonds

Another option available when saving for a child is premium bonds. Any adult can buy premium bonds for a child, although if the adult is not the child’s parent/guardian they will need the parent/guardian’s approval first. Premium bonds are tax-free and can be bought from a minimum of £25 and up to £50,000 can be held for the child. There are no guaranteed returns on premium bonds and instead of interest, premium bond holders are entered into a monthly prize draw where they are in with a chance of winning a cash prize ranging from £1 million to £25. Those considering a premium bond should, however, be aware that there is no guarantee that they will win any money in the prize draw.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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