Best bank accounts for kids and how to choose the right one

Finding the best bank accounts for kids can help them learn the value of money from an early age. As well as helping children learn about money, it can also encourage them to gain some financial independence. 

While there are pros and cons to pocket money, teaching children how to manage their finances when they’re young can benefit them in the future, potentially helping them to build a good credit score and stay out of debt. (See what happened when we asked kids about money, and the expert view on the kind of money comprehension their answers show).

Salman Haqqi, personal finance expert at money.co.uk, told us: “A bank account can give children a way to access their money whenever and wherever they are. By opening a bank account for a child, you can encourage them to save their birthday and Christmas money, teach them to check their balance and let them have a debit card so that they can spend their money in shops or online.” 

You might also be interested in these best apps for pocket money to make it easier to nurture a financially confident adult.

Best bank accounts for kids  

Below, we’ve listed some of the best bank accounts for kids. We’ve examined factors such as whether the account pays interest, the bank card it offers, how the account is managed, and whether there’s a monthly fee. 

Santander 123 Mini

•  No monthly fee 
•  Earn interest of up to 3% on balances of up to £2,000 
•  Choice of contactless debit card or cash card 

This account is designed for kids up to the age of 17 and pays a competitive rate of interest on account balances. Children can manage their own money but accounts must be set up in trust if the child is under the age of 13 (in basic terms, that means that the account is opened by one person for the benefit of another). Accounts can be managed online, via mobile banking, in branch or over the phone. 

HSBC My Money

•  No monthly fee 
• Linked to a savings account paying a rate of 3.25% on balances of up to £3,000 and 1% on balances over this 
•  Comes with a contactless Visa debit card 

This account is designed for 11 to 17 year olds and can be used for everyday banking purposes. It can be managed via the app, online, in branch or over the phone, and is linked to a child’s savings account.  

Lloyds Bank Under 19s

•  No monthly fee 
•  Earn interest of 0.50% on balances up to £999.99 
•  Choice of a contactless Visa debit card or a cashpoint card 

This account is designed for 11 to 17 year olds, and a small amount of interest is paid on balances. The account can be managed in branch, over the phone or by mobile and internet banking. 

NatWest Adapt

•  No monthly fee 
•  Earn 1% interest on your balance 
•  Comes with a contactless debit card 

This account is designed for 11 to 17 year olds and can be used to set up regular payments. It can be managed via the app, online, in branch or over the phone. Customers can withdraw up to £130 every 24 hours at NatWest ATMs without using their debit card.  

Nationwide FlexOne

•  No monthly fee 
•  Earn 0.25% interest on balances up to £1,000 
•  Choice of a cash card or a Visa debit card 

This account from Nationwide is designed for 11 to 17 year olds and can be managed online, via the app, over the phone or in branch. The account can be held until your child turns 23 when it will be switched to an adult account. 

How to choose the right bank account for your child 

When choosing a bank account for your child, you’ll need to consider factors such as how the account can be managed and whether there are any age restrictions - some banks offer slightly different accounts for different age groups, often to give teens more financial independence, for instance.

Similarly, you might be given the choice of a debit card or cash card. Debit cards can be used to make purchases online or in shops, but cash cards can’t, so these might be more suitable for younger children.

Brean Horne, personal finance expert at NerdWallet, says: “Deciding what type of account is best for your child will depend on individual and personal factors, but some things to consider include whether the account has a higher interest rate to help your child’s money work harder, whether there are any bonuses or perks, whether they offer a cash/debit card, how easy it is to open, and how much control you can have over their finances.” 

How old does a child have to be to have a bank account?  

Children can typically open a bank account from the age of 11. If your child is 16 or over, they can usually open the account independently. Otherwise they will need to be accompanied by a parent or guardian.

Many children’s bank accounts can be opened in branch or you can usually start the application online and then pop into your local branch with ID. Children will need to provide a birth certificate or passport to prove their identity, as well as a letter from school or college for proof of address.

If the child is younger than 16, a parent or guardian will typically need to provide their own proof of ID and address as well. 

Can kids get into debt with their own bank account?

No, kids can’t get into debt with their own bank account as kids’ bank accounts do not offer an overdraft.  

How do prepaid debit cards work and are they a good idea?  

An alternative option to a kids’ bank account is a prepaid debit card which can often be used by children from the age of six.

With a prepaid card, parents can:

• Control spending by loading cash onto the card (only this amount can then be spent)
• Track spending via the app that comes with the card
• Freeze the card where necessary
• Choose whether the debit card can be used at ATMs online or for store purchases.

However, there are downsides to prepaid cards, as Alice Haine, personal finance analyst at Bestinvest, explains: “No interest is applied, something that can be motivating for a child wanting to save, and most prepaid cards come with a monthly or annual fee of about £36 a year, with some also charging a fee to withdraw cash from an ATM. Also, children with prepaid cards cannot set up direct debits or make transfers – so they are limited in what they offer.”

It’s worth weighing up the pros and cons of both prepaid cards and kids’ bank accounts to see which works best for you. 

Do children pay tax on their accounts? 

Children don’t usually need to pay tax on the money they have in their account. They have the same personal allowance as adults, which means for the 2022/23 tax year, they can earn £12,750 without paying tax. On top of this, children are eligible for the £5,000 starting rate for savings and the £1,000 personal savings allowance. This means they can earn £18,570 this tax year before they need to worry about tax.

However, be aware that if money gifted by parents earns more than £100, the full amount of interest (not only the £100) will be taxed as if it were the parent’s and not the child’s. Fortunately, this £100 rule does not apply to money gifted by other family members, including grandparents, or friends. It also won’t apply to any money saved in a Junior ISA or Child Trust Fund.