The ten best children’s savings accounts
It is never too early to get your children into the habit of saving and by shopping around for the best rate, an easy access savings account can make a great home for birthday and Christmas money.
Opening a savings account is a good way to teach your little ones about banking and interest and to encourage them to have savings goals.
Research by the Government’s Money Advice Service found that adult money habits are set by the age of seven, highlighting the power of parents to foster good money skills at home.
Unfortunately, like the rest of the savings universe, interest rates and fringe benefits for kids are not as generous as they used to.
Gone are the days of special discounts towards trips to the cinema or the swimming pool.
Kevin Mountford, head of banking at MoneySuperMarket.com, says: “The children’s savings accounts market used to be competitive with banks bending over backwards to lure young customers with freebies and incentives however, that doesn’t seem to be the case now.
“Although we have seen NatWest re-launch its popular range of piggy banks, accounts for young savers that come loaded with freebies are few and far between especially as the choice of kids accounts has branched out to Child Trust Funds and Junior ISAs. The rates on offer from the top accounts however, are attractive and shouldn’t be sacrificed for the sake of a money box or goody bag, especially if parents are trying to instil a good savings habit early.”
Who offers the best rates?
At the moment, the children’s savings account at the top of the leader board is the Halifax Kids Regular Saver account, offering a standout 6.00%. The minimum deposit is £10 a month and the maximum is £100. The account must be held for a minimum of 12 months.
The Barclay’s Children’s Regular Saver Issue 1 account is the next best buy, paying 3.50%. This instant access account requires a minimum monthly deposit of £5 and maximum of £100.
Similarly, Dudley Building Society Junior Easy Saver offers 3.50% but with a minimum deposit of £10 a month and a maximum of £150. Savers will also need to lock their money away for 12 months.
Halifax Young Saver, HSBC Premier MySavings and Mansfield Building Society Young Regular Saver 1st Issue accounts all offer 3.00% with minimum deposits of £1 a month and all are instant access accounts.
Those with a bit more to set aside each month might want to consider Mansfield Building Society which allows deposits of up to £500 a month and is also giving away a free piggy bank with every new account.
Newcastle Building Society’s Big Little Saver account pays 3.02%. The account requires a minimum deposit of £1 (maximum £250) and gives instant access to savings. The building society is giving away a free goody bag with this account.
The Nottingham Building Society Robin Hood Young Saver account does not allow access to the savings pot until 31 August 2015, but the account offers 3.00% and a free goody bag. Minimum monthly deposit £1, maximum £100.
The Principality Building Society Dylan’s Regular Saver Bond Issue 5 account pays 3% but money will have to be locked away for 3 years. The minimum deposit is £10 (maximum £150) and there is a free money box with every new account.
Similarly the Children’s Bond account from Skipton Building Society offers 3.00% and requires a minimum deposit of £100, with a maximum deposit of £10,000 over the term of the bond. The account needs to be held until 8 August 2015.
Skipton also has the Leap Issue 2 account offering 2.75% with a minimum deposit of £1, maximum £50,000 over the term of the account with no minimum monthly amount.
If you’re considering this account, note that there is a collector’s card point system, where for every £20 saved in the account a sticker is added to the card. Once enough stickers have been collected the account holder can pick a free book from a selected choice.
Top tips to saving for the little ones:
• Time and the effects of compounding interest are your savings best friends, even if you only have small amounts to put away for your children a month/year. So make sure you get into the habit of saving little but often.
• Consider scaling back the amount you spend on children’s toys now, so that more of this money can go into their savings accounts. They might not necessarily appreciate it now, they definitely will do later.
• Make sure you review your child’s savings account and the rate it offers at least yearly. This way you can ensure that the account is still the most competitive in the market.
• Involve your children: let them know the reason you are putting money aside for them, and if they are old enough to understand, get them to also put aside whatever they can towards it too. This should instil in them the idea of saving for a rainy day – a life skill in itself.