Opening children’s bank accounts

From their first piggy bank, purse or wallet to opening their first bank account. Getting children into the habit of saving while they’re young is a great way to teach them the value of money.

First bank accounts help children learn that the longer they save, the bigger the pot becomes. You can have fun encouraging your child to decide what they want to save for, and setting targets. Together, you can check the progress of their savings each week (or month), and talk about their priorities – it’s a good way to learn that you can’t have everything at once.

They’ll have a huge sense of achievement when they reach their savings target. And, of course, the excitement when they get to spend it on something special.

Illustration of a stack of coins.

When’s the right time to open an account?

You could open a first bank account when you start to give your child pocket money. If you want them to understand that they can earn money through good behaviour or helping around the house, it makes sense to encourage them to save some of their hard-earned pocket money.

There are all sorts of accounts available. Some offer gifts when you open them, and with some you have to save a minimum amount each month. If you’re not sure which one’s right for your child, it’s worth speaking to an independent financial advisor.

Most banks won’t let a child open an account themselves until they’re seven years old. If they’re younger, they’ll usually let a parent or guardian act as signatory.

Which account to choose?

Choosing the right account depends on what you want your child to learn, and when. If you’re looking for a simple account to help your child get into the savings habit, these are some of the things you could think about:

  • Is it easy to get the money out? If you set a savings target for your child you probably don’t want an account that locks the money in for a year or more.
  • Is there a high street branch nearby? Walking into a bank to deposit money is a good habit to get used to.
  • Is there a minimum monthly deposit? If your child is just starting to learn about saving, you might not want to commit them to a minimum monthly amount.
  • Are there charges or fees on the account? If you’re not ready to commit all of your child’s pocket money, make sure there aren’t any monthly account charges.

You might want to do a bit of research online before you involve your child in the decision. Both Moneyfacts and Moneysupermarket have good comparison tables to help narrow down your search.

Also, banks can change the account details quite often, so check with the bank before you do anything.

Illustration of a signpost.

What about the interest?

It’s easy to over-analyse children’s bank accounts, and set diary reminders to move an account to achieve the highest interest rate. If you just want your child to learn the basics of saving, keep things simple and don’t try to teach all the lessons at once.

However, as your child gets older, and they’ve learnt the basics, you can always switch to an account with a better interest rate. This way they’ll learn how banks make their money, and how saving over the long-term will often give better returns.

Your child is allowed to have an easy-access account for their pocket money savings, and another for saving larger amounts for their long-term future. But you’ll need to remember that the latter type generally ties the money in, often until the child reaches 18. It’s worth noting that a child can’t open an adult ISA, but can have a Junior ISA.

Illustration of three pairs of shoes.

Children's tax free allowance

Like adults, children have a tax-free allowance. The rules can be quite complicated, but you’ll find a summary of some of them in our article on children’s savings This will give you an idea of how to make the most of your child’s tax-free allowance.

Don't forget to take any holiday that you have accrued during your maternity leave according to your employment terms and conditions. This can be taken in addition to your 52 weeks maternity leave and added on to the end.

Note: Whilst we take care to ensure Hub content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions.