- Home
- > Managing Your Money
- > What to consider when choosing products
- > Young Savers accounts
What to consider when opening a young persons savings account
There are many good reasons to open a young person’s savings account – from setting money aside for their future to encouraging good savings habits.
A savings account is also a great way for young people to watch their money grow and save for items they want, like a new bike. Depending on the goal, there are lots of accounts to choose from. Some can be opened by adults, including grandparents, in trust for a young person. Others, like the Halifax save4it account, can be opened by the young person themselves.
As part of our commitment to helping you make an informed decision, here are some things to consider when opening a savings account for a young person or when helping them open their own account.
Consider what you want from a savings account and how you want to save – do you prefer to put money aside each month, save some spare cash when you can, or invest a lump sum? If the account is to be opened and operated by the young person, you can discuss this with them.
Also check you can use the account as and when you like (online, by phone or in branch). Compare accounts to find the most suitable one for you and your savings.
Consider if you want to be able to withdraw from the account as often as you like. If so, an instant access account may suit you best. Some accounts give better interest rates if you can leave your money untouched for a specified period or if you can withdraw less often. With these types of accounts, you may lose interest if you withdraw your savings earlier, or more often, than expected.
Some of our accounts can be opened with just £1, whilst others may require monthly deposits or a lump sum. Click here for more information on suitable Halifax young savers accounts. Before opening an account, it’s important to work out how much you can reasonably afford to save regularly or as a lump sum.
And, if your circumstances change, consider whether you will still be able to save in the same way.
Money grows from interest being added to the account. But the best way to build up savings is to leave the money untouched for as long as possible and add to it. Small regular payments soon add up.
What else should be considered?
Interest can be paid monthly or yearly. Consider if you want a fixed or variable interest rate. With a fixed rate account, the interest rate is fixed on the day the first deposit reaches the account. With a variable rate account the interest rate changes from time to time, and the interest rate can go down as well as up.
Savings accounts are generally low risk. But in the unlikely event something happens to us, we are a member of the Financial Services Compensation Scheme so our customers’ savings are protected (up to £35,000).
Some young people find a bank account suits them better. Our Expresscash is suitable for 11-15 year olds and Cardcash for 16-17 years.
Young people don’t normally pay tax on savings (even if the account is held in trust for a child) until they are in employment and earning more than their personal tax allowance. When they are, they must tell us so we can register them. When the young person turns 16, they must re-register for gross interest if they are still eligible so they don’t pay tax on their savings. The account holder may need to be changed from the adult to the child to keep receiving gross interest. We will send a reminder letter with further information. For more details, contact HM Revenue & Customs or visit www.hmrc.gov.uk.
Next Steps
|
Find out more about our range of accounts for young savers. |
|
If you are a parent or guardian and would like to discuss our savings accounts and your finances in more details, why not have a face-to-face review in branch? Find out more about our Customer Review service. |
