Don’t forget the kids: 94 children’s savings rates slashed
Rates on adult savings accounts have hit record lows but children’s products haven’t been spared. If you’re a parent, check your kid’s account now.
The Bank of England’s decision to reduce interest rates to an unprecedented low of 0.25% in August led to a flurry of interest rate cuts on savings accounts. And children’s savings products were not spared.
In fact many providers started reducing rates well in advance of the Bank’s announcement.
According to data from Moneyfacts.co.uk, there have been a total of 94 interest rate cuts on children’s savings accounts and just three rate rises since the start of 2016.
Of all the providers, the State Bank of India has slashed the most rates, some by as much as 1.07%.
But in terms of the largest interest rate cut, the popular Halifax Kids’ Regular Saver topped the charts, falling from 4% to 2% in June. It also shaved 1% off its Junior Cash ISA at the same time (from 4% to 3%).
Beverley Building Society cut 1% off its Junior Cash ISA product earlier this month (from 3% to 2%) and West Brom Building Society also cut its Children’s Fixed Rate Regular Saver product by 1.10% (from 3.60% to 2.50%).
Skipton Building Society cut both the rates on its Junior ISA and Child Trust Fund from 2.65% to 2%, Hanley Economic Building Society cut its Young Savers’ account rate from 2.50% to 1.95%, while Lloyds Bank reduced its Junior Cash ISA rate from 3% to 2.5%.
Rachel Springall, finance expert at Moneyfacts, said: “It’s hugely disappointing to see children’s savings accounts facing the same treatment as adult accounts, but it just shows how important it is for parents to review the rate regularly to make sure the account remains competitive.
“If a good deal turns bad then consider switching the account somewhere else. For example, Coventry BS currently offers a best buy Junior ISA (JISA) paying 3.25% and accepts transfers in – just keep in mind that it is a variable rate so it could change over time.”
Other best buys
Nationwide, Halifax, TSB, Tesco Bank and Darlington Building Society all offer 3% gross on cash JISAs.
You may want to consider a junior stocks and shares ISA but this is riskier as returns will depend on how well your investments – either funds or shares – perform. See YourMoney.com’s Everything you need to know about Junior ISAs and A guide to choosing children’s savings accounts to see which is best for you and your little ones.
Top paying children’s accounts:
(Data from independent research firm Savings Champion).