Top of main content

Saving for your grandchildren

Whether you’re saving for their education or to give a gift when they turn 18, the earlier you start putting money away for your grandchildren the easier it will be to reach your target amount.

Opening a specific savings account for a grandchild can keep the money separate from your own savings pot. You may also be able to take advantage of a better interest rate and tax exemptions. 

When can you open a savings account for your grandchild?

You can set up a savings account for your grandchild whatever their age. Some grandparents set them up when their grandchild is born, or to mark a special occasion like a birthday. 

How to open a savings account for a grandchild

You’ll need to check you’re able to open a savings account on behalf of your grandchild and also what the requirements are. These may vary between banks.  

For example, to open an HSBC Future Saver for Children you’ll need:

  • to be 18 years old, or over
  • ID for the child in the form of a passport, birth certificate or adoption certificate
  • proof of the child’s address provided by the parent/guardian who they live with

You can only open an HSBC Future Saver for Children in branch and it can only be opened for someone aged between 0 and 18 years.

Once you’ve opened the account, you’ll be able to manage it via:

  • online banking
  • telephone banking
  • HSBC UK Mobile Banking App
  • in branch

As a grandparent, you won’t be able to open a junior ISA for your grandchild. This can only be done by a child’s parents. Although, you may be able to make contributions to one. 

How much do you need to open a savings account for your grandchildren?

Depending on the type of children’s savings account you choose, you may be able to open it with just £1. You could set up a standing order to pay into the account monthly, or add a lump sum and leave it to earn interest.

For example, if you save £20 a month into a savings account which earns an annual interest rate of 0.75% AER/Gross, you could expect to save:
Year
Balance
1
£240.97
2
£483.76
5
£1,223.08
10
£2,492.72
For example, if you save £20 a month into a savings account which earns an annual interest rate of 0.75% AER/Gross, you could expect to save:
Year
1
Balance
£240.97
Year
2
Balance
£483.76
Year
5
Balance
£1,223.08
Year
10
Balance
£2,492.72
Or if you added a lump sum of £2,400 into a savings account which earns an annual interest rate of 0.75% AER/Gross you could save:
Year
Balance
1
£2,418.00
2
£2,436.14
5
£2,491.36
10
£2,586.20
Or if you added a lump sum of £2,400 into a savings account which earns an annual interest rate of 0.75% AER/Gross you could save:
Year
1
Balance
£2,418.00
Year
2
Balance
£2,436.14
Year
5
Balance
£2,491.36
Year
10
Balance
£2,586.20

Note: these tables assume the interest rate listed does not change over the course of the 10 years.

Think about what method will work best for you. It could even be a combination of both where you regularly contribute a certain amount, but also add a larger amount from time to time.

Keep in mind, you can gift up to £3,000 each year and the receiver won’t need to pay inheritance tax on it. This annual exemption is in total, not per grandchild. Giving within this limit each year can help you avoid needing to pay tax further down the line.

It’s important to be aware that if you pass away within 7 years of giving the money, the receiver may need to pay inheritance tax on it.

Can you open a savings account for your niece or nephew?

Depending on the bank, you may be able to open a savings account for your niece or nephew. Again, you may be able to save monthly into the account, or add a lump sum. You’ll also need to check what the requirements are in order to open an account for them. 

Definitions 

AER: stands for Annual Equivalent Rate and shows what the gross rate would be if it were paid and compounded each year.

Gross: this is rate of interest paid, but not compounded each year.

It’s easy to get in touch online. Talk to us directly through our chat channels.