One of the most common reasons for opening a child savings account is to save for your children’s future. Starting this process early by opening an infant savings account means that the money you and your child save until they turn 18 can put them on a solid financial footing for their adult life. They might even be able to afford a car, university tuition fees, or a house deposit.
Beyond long-term goals, you might also want to open a children’s savings account for short- or medium-term objectives. Whether it’s saving for a computer, tablet, or musical instrument, opening an account encourages your child to save for these big purchases themselves.
What is needed to open a child savings account?
You will need various documents to open a children’s bank account:
Their birth certificate
If you’re opening an account with a bank or building society you don’t bank with as an adult, you’ll need to provide your proof of ID, such as your passport or driving licence, as well as a bank statement or utility bill
Children under the age of seven must have a parent, guardian, or grandparent set up an account
Some easy access accounts require the parent to already have a current account with the bank
Before the pandemic, opening a child savings account meant visiting a branch. Now, you can open an account online, depending on the provider, by providing a photo of your child, photo ID, and proof of address.
Can I open one savings account for two or more children?
No. Like adult savings accounts, a child savings account is unique to them. So if you want to save for more than one child, you’ll have to open separate savings accounts for each of them.
At what age can a child open a children’s savings account?
Your child usually has to be over seven years of age to open their own child savings account. If they’re under seven, a parent, guardian or grandparent should open the account on their behalf, and will normally administer the account until the child reaches the age of 16. You can also still choose to do this if your child is over seven. Specific requirements will depend on the type of account you open and the service provider, so it’s best to check the terms and conditions.
It’s important not to confuse this with a bank account for kids, which generally requires the child to be slightly older. A child bank account usually has a minimum age of 11, while a teen bank account can typically be opened from 16 years of age.
When can a child take over control of their savings account?
When a child can take control of their savings account really depends on the type of child savings account you open and the provider you open it with.
There are two instances, however, where the age is set in stone. If your child has a child trust fund or a Junior ISA, they take control of their account when they turn 16, although they can’t access their money until they turn 18.
Can a grandparent open a savings account for a grandchild?
Yes, grandparents can open savings accounts for their grandchildren. To open a savings account for a minor, you’ll need to provide the correct documentation to open the account, including your grandchild’s birth certificate. You’ll need to provide your ID and proof of address if you’re opening an account with a bank or building society where you’re not a customer.
If you want to contribute to your grandchild’s savings, you can gift up to £3,000 per child per year without paying inheritance tax (although it’s worth noting that no tax is due on gifts made more than seven years before your death). If you don’t gift the full £3,000, the difference can be carried over for one tax year.
FAQs
High-yield savings accounts are generally the best option since they offer above-average APYs. No matter which option you choose, your child's funds will be insured for up to $250,000 per depositor through the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA).
What is the best type of savings account for a child? ›
What are the best savings accounts for kids?
- Best for earning a high APY: Alliant Credit Union Kids Savings Account.
- Best for setting savings goals: Capital One Kids Savings Account.
- Best for financial education: PNC Bank S is for Savings. ...
- Best for younger kids: USAlliance Financial MyLife Savings for Kids.
Best Minor Savings accounts
- Kotak Mahindra Bank Junior Savings Account.
- IDFC Minors Savings Account.
- HDFC Bank Kids Savings Account.
- ICICI Bank Young Stars Savings Account.
- SBI Savings Account for Minors.
You can open a joint savings account with your child that allows them to save money for the future. Most kids' savings accounts have no monthly fees and include easy-to-use mobile apps and educational resources for your child. The best savings accounts for kids offer competitive interest rates on all deposits.
What is the best way to save money for a minor child? ›
How to Save Money for Your Child
- High-yield savings or money market account.
- Certificate of deposit.
- UTMA or UGMA account.
- 529 plan.
- Trust.
- ABLE account.
Since CDs typically earn higher annual percentage yields (APYs) than standard saving accounts, opening a CD can help your child's savings grow faster. You might also purchase a CD to give to your child or provide a head start on paying for a first car, wedding or other big goal.
Should I open a savings account or 529 for my child? ›
Choosing a 529 savings plan over other types of savings vehicles. Investing in a 529 offers several advantages over other types of accounts, like taxable brokerage or even high-yield savings accounts. For one, you get several tax advantages, which can help you save on both the cost of education and your income taxes.
Do I have to pay taxes on my child savings account interest? ›
If your child's interest, dividends, and other unearned income total more than $2,500, it may be subject to a specific tax on the unearned income of certain children. See the Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income for more information.
At what age should a child have a savings account? ›
A child can generally have a savings account at any age. The best savings accounts for kids earn interest and have no monthly fees. A parent or guardian will likely need to open the account.
How much should you save per month for your child? ›
A good starting point when saving for your children is setting aside 3% to 5% of your net monthly income. Let's say your household income is $6,000 after taxes, this works out to $180 to $300 per month. It doesn't seem like a lot, but every little helps, and could sit neatly within your budget.
Roth IRAs are ideal for kids, because children have decades for their contributions to grow tax-free and contributions can be withdrawn tax and penalty-free. There are no age limits for custodial Roth IRAs, but kids must have earned income and obey contribution limits.
Should I open a high yield savings account for my child? ›
High-yield savings accounts offer many benefits that will give your child a leg up when they enter adult life, so opening one now can be a smart move if you want to prepare your kids for later in life. Get started with a high-yield savings account for your child here.
How can I build my child's wealth? ›
6 Practical Ideas for How to Make Your Kid a Millionaire
- Start a Family Business and Employ Your Child. ...
- Open a ROTH IRA for Your Child. ...
- Buy an Investment Property When They Are Born. ...
- Build Credit Early. ...
- Open a UTMA Custodial Account at a Brokerage. ...
- Open a 529 Savings Account.
“A good rule to live by is to save 10 percent of what you earn, and have at least three months' worth of living expenses saved up in case of an emergency.” Once your teen has a steady job, help them set up a savings program so that at least 10 percent of earnings goes directly into their savings account.
What is a trust fund for a child? ›
Child's trust refers to a trust fund created for kids, usually by family members, in order to have the assets managed until the children mature.
Does a 529 earn interest? ›
The biggest advantage is the tax-deferred compounding of a 529 account, which means you earn interest on the original investment as well as the interest earned over time. By making investments early on, it gives the money time to compound and grow.
Can I open a high interest savings account for my child? ›
Can You Open a High-Yield Savings Account for Kids? Many banks and credit unions, including some on the list above, offer high-yield savings accounts for kids. High-yield savings accounts operate similarly to standard savings accounts but earn higher APYs.
Who pays taxes on a custodial account? ›
Unlike 529 plans and ESAs, custodial accounts are subject to the so-called "kiddie tax." This tax rule applies to unearned income (i.e., investment income) up to a certain threshold. Over that threshold, the child will pay taxes at the parent's tax rate. To learn more, see IRS Publication 929.
