A savings account for my toddler-please explain as if I’m stupid!

[Missmuffin1984]

I would like to open a savings account for my
toddler, and I’m not even sure whether a traditional bank account is even the best option nowadays. Also, I read an article on The Independent and it has left me feeling more confused than ever about the maximum amount I can have saved before there is a tax. Also am I correct in thinking some banks make it difficult to withdraw money?

my thinking has been inspired by a post I read here where someone in a friendship group was stingy with their spending for 18 years & lived on a 1 person salary, managing to save £850k for their child! 😂

We opened Future Saver accounts for both our children at HSBC. That was 13 and 11 years ago and we opened them when they were babies. It is money that is ringfenced for the- but we can put money in and take out if need be (we took £300 out for DS1 when he turned 13). They can access it at the age of 16 I think. When they turned 11 they could have their own HSBC accounts where we put their pocket money.

I would see if HSBC have something like that still for new customers.

There are also junior ISAas but I know nothing about those. The key for us at the time was we wanted to save money and then at a certain amount transfer the money into investments for the DCs so it can be built upon over the years.

I set up a savings account for my Daughter when she was born a year ago, i went into Barclays Branch (who i bank with) and explained what i wanted to do and they set up a childrens savings account linked to my main account. It will automatically transfer into her name at either16 or 18 i cant remember which. But no issues with taking money in or out if needed.

We’ve got junior cash ISAs with the Coventry.

We have junior cash isas which they can't touch till they are 18 (and nor can we). We also have a saving account for smaller amount where birthday money etc is put and then can access if they want. Now they are older, since they were 11 / 13 they have also had current accounts which are with HSBC the same as their savings accounts so they can move money between them. Their ISAs are seperate though.

Appreciate the responses, thank you!

We have:

1. kids cash ISA - this is fixed cash % interest with NS&I and she can’t access until 18
2. children’s savings account with Halifax - this you pay tax on over a certain amount depending on tax band etc but she / we could access whenever, it’s in my DP’s name but for our DD; and
3. s&s kids ISA with fidelity (again can’t access until 18).

We invest across all 3 each month to balance risk and reward. I think they are basically your main options. No tax implications for you with the ISAs but you are capped at how much you can put in each year plus you cannot access or control where it goes at 18!

Oh and we have a premium bond account for her but that’s just for fun as we haven’t won a penny on it in 2.5 years!!

We have a Nationwide future saver. Its in the childs name but managed by the parent(s). You can make withdrawals (we recently took out a few thousand to cover some private medical stuff for our DC). I think its 2 withdrawals in a year without affecting the interest rate. It also doesn't automatically transfer control to the child at 16/18, it's when the parent decides to change it over which has been a hidden blessing as our DC has a disability and likely won't be in a position to manage his own finances at 18.

Thanks for starting this OP. I might move my Dcs future savers to junior ISAs. Or indeed nationwide because DS1 has a disability and a tendency to try and buy friends so we might need to have tighter control of it.