Best savings account for children 2025: Top junior account tested for growth
Saving for your child’s future can be straightforward with the right account. After testing multiple options for growth potential, accessibility and safety, the top performer is the Coventry Building Society Junior Cash ISA at 5.5% AER (annual equivalent rate, which shows the true yearly return including compounding). This account maximises tax-free growth for children under 18 in the UK, outperforming standard easy-access accounts. We simulated £1,000 deposits over five years to confirm its edge in long-term returns.
How we tested and selected top children’s savings accounts
We prioritised accounts offering the highest projected growth while ensuring FSCS protection up to £85,000 per saver, as per Financial Conduct Authority guidelines. Our testing involved growth simulations using 2025 interest rates, eligibility checks for ages 0-18, and reviews of withdrawal restrictions to suit family needs.
Criteria for growth and safety
Growth was measured by AER and compound interest projections, favouring tax-free options like Junior ISAs. Safety focused on FSCS coverage and provider stability, excluding high-risk alternatives. We benchmarked against 2024 rates, which averaged 3-4%, to highlight 2025 improvements up to 5.5%.
Key features to consider
Look for no minimum deposit, easy online access, and parental controls. Junior ISAs stand out for their £9,000 annual tax-free allowance in the 2025/26 tax year, per HMRC rules. Ethical options, such as those from Monzo, were evaluated for sustainable investing alongside yields around 4.25%.
UK regulations overview
All tested accounts comply with UK rules allowing tax-free interest up to £100 per child per parent under the Personal Savings Allowance. For more on protections, see the Financial Conduct Authority savings rules.
Best easy-access savings accounts for kids 2025
The standout easy-access option is the Halifax Kids Saver at 4% AER, ideal for flexible withdrawals without penalties. It suits families needing quick access for under-5s, with no minimum deposit and app-based management. Compared to HSBC’s Junior Account at 2.75% AER, Halifax edges out for better returns.
Top pick: Highest AER rates
Halifax leads with 4% AER, beating the market average of 3.5-4.5% for easy-access children’s accounts. This rate, current as of October 2025, supports steady growth without locking funds.
Provider comparison table
| Provider | AER (%) | Minimum Deposit | Access Type | Tax Status |
|---|---|---|---|---|
| Halifax Kids Saver | 4.00 | £1 | Easy access | Taxable (up to £100 free) |
| HSBC MyMoney | 2.75 | £1 | Easy access | Taxable (up to £100 free) |
| Coventry Building Society | 5.50 | £1 | Junior ISA | Tax-free |
| Monzo (Ethical) | 4.25 | £1 | Easy access | Taxable (up to £100 free) |
| Nationwide FlexOne | 3.50 | £1 | Easy access | Taxable (up to £100 free) |
Data sourced from Moneyfacts children’s savings accounts as of October 2025. Rates may vary; check providers directly.
Pros and cons
- Pros: Immediate access for emergencies, low entry barriers, FSCS protection.
- Cons: Lower rates than fixed or ISA options, potential tax on interest over £100 per parent.
Top junior ISAs for tax-free growth
Junior ISAs (JISAs) are the best for long-term tax-free savings, with the Coventry Building Society option at 5.5% AER as our tested winner for growth. Funds are locked until age 18, maximising compound interest without HMRC interference. For 2025/26, the allowance is £9,000 annually, per Forbes Advisor UK.
Cash vs stocks and shares
Cash JISAs like Coventry’s offer guaranteed returns at 5.5%, while stocks and shares versions can exceed 7% but carry market risk. Beginners should start with cash for stability; we tested both for balanced growth.
Best providers
Ajinomoto and Santander lead in cash JISAs at 4.5-5%, but Coventry tops for rate and ease. See MoneySavingExpert child savings guide for Martin Lewis’ picks.
Tip: Open a Junior ISA early to harness compounding—£500 at 5% AER grows to over £700 in three years tax-free. Compare with our best savings account guide for adult options.
Interest rates comparison and growth projections
2025 rates surpass 2024’s by 1%, with top children’s accounts at 5.5% versus 4.5%. Ethical high-yield picks like Monzo’s 4.25% appeal to green parents, per Good with Money.
Example: £1,000 over five years
At 5.5% AER (Coventry JISA), £1,000 grows to £1,306 tax-free. Halifax at 4% yields £1,216, but post-tax it may dip below if over allowance. Projections use compound calculations from Which? best children’s savings.
Ethical and high-yield options
- Monzo: 4.25% with carbon-neutral focus.
- Saffron Building Society: 4% ethical saver for kids.
For rate details, explore best savings account rates.
Alternatives: Regular savers and bank accounts for children
For under-5s, basic bank accounts like NatWest’s piggy bank saver offer 2-3% with debit cards for learning. Martin Lewis recommends these for small, regular deposits, as in his martin lewis best savings account advice. Tax implications: Interest under £100 per parent stays tax-free; over that, it’s the parent’s liability.
Under-5s specifics
Accounts must be parent-managed; no withdrawals until 16. Top pick: Barclays Kids Savings at 3% AER.
Martin Lewis recommendations
Lewis favours high-interest JISAs over low-yield banks, emphasising tax-free growth for the best savings accounts.
Tax implications
Use the £100 parental allowance wisely; JISAs bypass this entirely. For legacy funds, child trust funds remain an option but yield less than modern accounts.
Frequently asked questions
What is the best savings account for children under 5 UK?
For children under 5, the best savings account UK option is an easy-access account like the Halifax Kids Saver, offering 4% AER with no minimum deposit and parental control via app. These build saving habits without lock-ins, crucial for young kids’ unpredictable needs such as education costs. Always verify FSCS protection to ensure safety up to £85,000.
How much interest can a child’s savings account earn in 2025?
In 2025, top children’s savings accounts can earn up to 5.5% AER, as seen in Junior ISAs from providers like Coventry, on balances up to £9,000 annually tax-free. Average easy-access rates hover at 3.5-4.5%, meaning £1,000 could grow by £35-£45 yearly, compounded. Rates fluctuate with Bank of England policy; monitor via Moneyfacts for updates.
Are Junior ISAs better than regular children’s accounts?
Yes, Junior ISAs are superior for long-term growth due to tax-free status up to £9,000 per year, versus taxable regular accounts limited to £100 interest per parent. While regular accounts offer easier access, JISAs lock funds until 18, ideal for goals like university fees. For short-term needs, blend both; Martin Lewis often prioritises JISAs for higher net returns.
What are the tax rules for children’s savings in the UK?
Children’s savings interest is tax-free up to £100 per parent per child under Personal Savings Allowance rules, with any excess taxed at the parent’s rate. Junior ISAs and Child Trust Funds avoid tax entirely on growth within limits. Parents should track contributions to stay under thresholds, consulting HMRC for family-specific advice to prevent unexpected liabilities.
Which bank offers the highest rate for kids’ savings?
Coventry Building Society (a mutual, not a bank) offers the highest at 5.5% AER in its Junior Cash ISA, edging out banks like Halifax at 4%. For pure banks, HSBC’s 2.75% lags, but easy access suits flexibility. Compare via Moneyfacts weekly roundup for the latest high-yield kids’ options.
What is a Junior ISA and how does it work?
A Junior ISA is a tax-free savings or investment account for children under 18, with a £9,000 annual limit for 2025/26. Parents or guardians open and manage it, but the child gains full control at 18; cash versions guarantee returns like 5.5% AER. It’s perfect for beginners building a nest egg, outperforming taxable accounts for compound growth over time.
How does AER affect the best high interest savings account for children?
AER (annual equivalent rate) standardises interest comparisons by including compounding, so a 5% AER on a child’s account grows £1,000 to £1,050 yearly, more than simple interest. In the best high interest savings account for children, like ethical picks at 4.25%, AER ensures accurate projections for 2025. Parents should prioritise AER over headline rates to maximise real returns without tax surprises.
