It’s 2020 , you want to open up a savings account for your child. You go online to check out your options and very quickly realise the majority of them require you applying by post or going to the branch. You think about it but decide you’ll do it some other day.
A few months later COVID-19 still has us working from home and minimising interactions with the outside world. You decide you'll wait till the world's back to normal. She's still a baby after all - you have time on your side.
It’s 2038, your child has just turned 18. You wish you’d started saving for her but unfortunately that “other day” never came and so you never actually ended up opening a savings account or Junior ISA for her.
Well worry not! We’ve found some great online children’s savings accounts and junior ISAs. Yes , the account opening process is still quite painful for them, but it’s better than leaving your house. If you want to find out more about what we're building at Nosso then sign up here.
What are some good child savings accounts?
There are currently only five children's savings accounts that you can open online. Three of them are part of Lloyds Banking Group (Lloyds, Halifax and Bank of Scotland), one is only available online to current customers (Nationwide) and the final one is Natwest.
The table below compares these accounts — as well as those that can be opened in branch. For each one we've specified the account opening process and some other information to help you figure out what's best for you.
As well as paying attention to the account opening process, it's important to keep an eye on the maximum balance and the drop in interest rate if that balance is exceeded. Depending on how much you're saving for your child every month you could exceed this quite quickly. For example, if you're saving £100 per month, you'll exceed the Santander maximum balance in just over a year, the Halifax, Lloyds and BoS maximum balances in 3 years and the Barclays maximum balance in around 7 years.
We know remembering all of this stuff can be painful and so one of the things we're building at Nosso is a cash savings account that regularly reviews the market to make sure you're getting the optimal savings rate. If you go over the maximum, no problem. We'll let you know the next highest rate account and how much you should be contributing there instead. Think of it like electricity bill switching - except for your child's savings account.
What are the best Junior Cash ISAs?
If you're comfortable locking up the money till you're 18 (but don't want to face investment risks) then a junior cash ISA could be the best option for you. They tend to pay a higher interest rate than regular child savings accounts and any interest you earn is also exempt from income tax (this is less crucial nowadays with interest rates so low but may be useful again one day....).
As with the kids savings accounts, there isn't a huge selection of junior cash ISAs that you can open online. The market leader (2.75%) is Tesco Bank and luckily for you, you can open an account with them online. In addition to the table below, a number of the building societies offer junior cash ISAs, however they can only be opened by post or in branch. The leading rate is currently 2.95% and that's offered by Coventry Building Society.