Children’s bank accounts: How to help your kids spend and save

Let’s talk money: Kids’ games and challenges

Help your kids learn about budgeting and saving with our “build your dream life” challenge. Watch the video above to refresh your knowledge, click below to download the instructions and worksheets, then get the whole family together and find out who would prioritise a pet horse over a mansion with a pool.

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Children’s spending: What you need to know

RIP piggy bank. Most kids over the age of 10 now use some sort of app to manage their money. When we polled 1,000 kids aged 10 to 15 in 2021, we found that 3 in 5 used either a banking app or a pocket money app like GoHenry or Rooster Money.

Children’s pocket money apps, and the colourful debit cards that go with them, really took off in 2021 and they’re not just for older kids. Both GoHenry and Rooster Money, along with another brand, nimbl, aim their cards at age 6+ while Osper’s cards are for age 8+.

While the apps tend to have more interesting, and educational, features than your banking app offers, the main differences between these apps and a plain, old bank account are the parental controls and notifications, the ability for kids to earn money by doing chores, and the subscription cost. Children’s pocket money cards and apps cost a few pounds a month, while a child’s bank account is generally free. Pocket money apps typically offer a free trial, though.

Two challenger banking brands – Revolut and Starling Bank – offer a dedicated children’s app with a card and many of the features of their pocket money app rivals. And NatWest recently bought Rooster Money, so the gap is narrowing. But we’ve set out the main differences between bank accounts and pocket money apps below.

• Jargon explained

  • Pocket money apps Also called “children’s debit cards” and “children’s prepaid cards”, these are subscription products that offer a spending card and an app that allows parents to see and control a child’s spending.
  • FSCS The Financial Services Compensation Scheme kicks in if you’ve deposited money in a bank that’s in the scheme and it goes bust. Under the scheme, you get your money back, but only up to £85,000.

Debit cards for kids

The pros & cons of each card, and who it might suit

Bank accounts for kids

The best accounts for children, and what each one offers

Bank accounts for teens

How teen accounts are different, plus top accounts’ pros & cons

Children’s savings: What you need to know

It’s never too early to start a savings habit. Children’s savings accounts are slightly different from their adult counterparts as they can only be opened by the child’s parent or legal guardian. You’ll typically also get a higher rate of interest, as banks want to establish a relationship with customers from an early age in the hope they stay on into adulthood.

What types of children’s savings accounts are there?

There are several. Picking the right one will depend on several factors. What kind of access do you or your child want? What are they saving for? Are you looking to earn a high rate of interest? Are you depositing a hefty sum or planning to so that tax might be a consideration?

The most common types of children’s savings accounts are regular savings accounts, easy access savings accounts, fixed bonds and junior ISAs (which are tax-free but have an annual limit). There’s also the option to take out Premium Bonds for your child. These offer the chance to win tax-free prizes each month rather than earn interest.

Do children’s pocket money apps offer savings accounts?

Several pocket money apps have a savings section, but this is typically just an area on the app where your child can set aside money, not a savings account. But as digital banking evolves, these could become interest-paying accounts.

How much control will my child have over their savings?

Access will depend on your child’s age, the account type and the terms of the account you choose. Generally, the older the child, the more control they can have over their savings. However, if you open a junior ISA for your child, neither you nor they can touch the money until they turn 18.

What happens to a children’s savings account when my child turns 18?

Most accounts will be converted to regular instant-access savings accounts when your child turns 18 years old. The provider will normally contact you and your child in advance to explain the new terms that apply to the account.

If the account is a junior ISA, it will become an adult ISA and the tax-free benefits will remain as long as the account isn’t closed and you stay within the annual tax-free deposit limit. More on junior ISAs below.

• Jargon explained

  • Children’s savings accounts Accounts designed for children and their families to add money to. These accounts typically offer a decent interest rate on savings and aren’t designed to be used for making purchases.
  • Premium Bonds These are a popular type of savings account offered by NS&I. Instead of getting interest, you are entered into a monthly prize draw where you can win between £25 and £1 million tax free. You might win big…but you might get nothing. You can withdraw your money when you want to, and the scheme is backed by the UK government. You have to be aged 16 or over to buy Premium Bonds, but parents or guardians can hold them in the name of a child under 16.

Children’s savings accounts

Compare children’s savings accounts to find the best rates

Savings accounts for grandchildren

Find out your options for saving for your grandchildren’s future

Premium Bond alternatives

Premium Bonds aren’t the only accounts with a prize draw. Find out alternatives

Saving & investing for their future

In a bid to encourage parents to save for their kids’ future, the government offers tax incentives through junior ISA (JISA) accounts for kids. These are long-term savings accounts and as long as you deposit no more than the annual maximum (£9,000 in the tax year ending April 2023), the returns you get are tax free.

There are 2 types: cash JISAs and stocks and shares JISAs. The latter is an investment and your capital is at risk, as with any investment, but your returns could be bigger than those in a cash JISA. The money is locked up until the child turns 18, and it belongs to the child. A child can have one or both types of ISA.

Children’s banking resources

• Children’s savings calculator. If your child is saving for something in particular, say a new bike or a video game, you can use this calculator to work out how long they will need to save for.

• Jargon explained

  • Junior ISA JISAs are long-term, tax-free savings accounts holding money that belongs to a child, with no access until they turn 18.
  • Child trust funds CTFs are long-term, tax-free savings accounts for kids born between 1 September 2002 and 2 January 2011. After this point, providers offered JISAs instead.

Account types explained

How to tell your JISA from your LISA, and why it matters

Junior ISAs

Compare JISAs from major providers to find the best rates

Junior stocks & shares ISAs

Compare fees & features for investing JISAs from major providers

Children's accounts news & launches

New call for money lessons in school as 4 in 5 kids feel short-changed

A new call for better financial education in schools follows a report by the Education Committee.

Read more…

GoHenry expands kids’ learning features in the app

GoHenry adds advanced learning modules for children aged 12+ to its Money Missions – all the details here.

Read more…

Lloyds Bank launches combined spending and savings account for kids

Lloyds Bank launches Smart Start, a children’s account which combines both spending and savings accounts under one app.

Read more…

Written by

Kate Steere

Editor

Kate Steere is an editor at Finder, specialising in fintech, banking and cryptocurrency. She has previously written for The Motley Fool UK and Fitch Solutions, where she covered a wide range of personal finance topics and kept a close eye on market trends. Kate has a Bachelor of Arts in Modern History from the University of East Anglia. When not working, she can usually be found curled up with a good book or heading out for a run. See full bio

Kate's expertise

Kate has written 177 Finder guides across topics including:

• Fintech
• Banking
• Cryptocurrency
• Mortgages
• Payments