My daughter had a Halifax savings account for a number of years. However, the bank doesn’t offer a product/s, where she can earn interest and have a cash card so we had to look for something else.

Savings accounts with cash cards for children

I’m with HSBC myself and discovered its MySavings account for 7-17 year-olds. It has an interest rate of 5% on balances up to £3000, which is the best on the market currently. From the age of 11, children can also have a current account (MyAccount). This account combined with the savings account forms a package called MyMoney.

MyAccount provides the all-important cash card (HSBC Visa Debit Card), which can be used in stores, online and at cash machines. You are able to transfer money into the current account from the savings account and vice versa. However, we’ll fund it separately with money that isn’t earmarked for savings. The current account doesn’t pay any interest so we won’t be putting too much in it. Our main objective is to save

Opening the savings account

Parents or guardians who are existing HSBC customers (current account) can apply online otherwise you need to go in branch. If your child is under 16 you have to be present to open the account.

When I opened an account for my eldest, we did have to go in despite me banking with HSBC customer (this has subsequently changed ). It was a good experience for my daughter. She answered quite a few know your customer (KYC) questions, signed an official document (she hasn’t had to use her signature on anything important before so this was pretty major) and filled in a paying in slip. Finally she had to go to the counter and make her first deposit on the new account.

She can do internet, phone and mobile banking, which is very exciting stuff!

Key facts

• Get 5% interest on balances up to £3000 and then 2.25% interest on anything over that
• Open the account with just £10
• A current account is automatically opened on child’s 11th birthday so they get a debit card
• 7-10 year olds get a money box on opening the account
• Ages 11 and up can use online, mobile and phone banking to check their balance and send money between their savings account and current account
• With the current account they can only use/withdraw the money that’s in there

Find out more here: https://www.hsbc.co.uk/savings/products/mysavings/

You might also like: How Much Pocket Money?

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Savings Accounts

If you don’t want to lock money away for a long period and are simply looking for a place to put birthday money, Christmas money and the occasional spare fiver, whilst getting some interest, then a simple children’s savings account is the way to go. You open the account in your child’s name but manage it yourself until they’re old enough to do it themselves. Children’s accounts usually pay higher rates of interest; a quick look on a comparison website is the best starting point. You’ll be able to see who gives the highest rate of interest and if there are any conditions attached such as saving a minimum amount each month, not having instant access or tying up the money for a fixed term of say a year. Check the features of the account carefully and then rate according to your needs.

Child Trust Fund

You may have heard of Child Trust Funds (CTFs). These were long-term, tax-free savings accounts for which the Government gave you a £250 voucher. I set up one for my eldest daughter. Sadly, the £250 contribution from the Government was completely stopped from January 1st 2011, and you can no longer set up a new CTF. Essentially, they were replaced with Junior ISAs.

Junior ISAs

Unlike a child’s savings account, you can’t dip into a Junior ISA (even if you do see an adorable little snowsuit in the sale). This money is locked in until your child turns 18. When they do hit this age the money is theirs not yours! Therefore think carefully before setting one up.

If you’re happy with the idea of not being able to get your hands on the cash, the next decision to make is what type of Junior ISA. You can have a cash one, a stocks and shares one (often referred to as an investment ISA) or both. The Junior ISA limit is £9,000 for the tax year 2023/24 (whether you have one or both types).

A cash Junior ISA pays tax-free interest on the money you save. It doesn’t have the potential for significant gains like the stocks and shares ISA. However, you won’t lose any money if the stocks you’re invested in take a tumble. With a stocks and shares Junior ISA your money is invested and you won’t pay tax on any capital growth or dividends you receive.

I set up investment ones for my twins with OneFamily (formerly Family Investments). I’m not too worried about the ups and downs of the stock market. This is a long-term investment and I fully expect that in the next 17 years the stock market will pay some very good returns.

There are many providers of both types of ISA. Comparison websites give a good snapshot and the GOV.UK website (https://www.gov.uk/junior-individual-savings-accounts) has a really useful section, which covers all the key facts.

A final note: I am not a financial expert, I am talking about my own experiences, so as with anything DYOR!

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