Child Savings

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Child Savings Accounts

There are more than 75 banks and building societies that are offering savings accounts for children. The choice is huge but some of the interest rates on offer are very low, some as little as 0.1%. Best advice suggests that you should keep a close eye on the performance of the account as well as alternative products that are launched so that you can swap to a better deal if the rate drops.

There is no minimum age for setting up a Child Savings Account but many require the signature of an adult up until the child reaches the age of 11. Most Child Savings Accounts can be maintained until the child’s 18th birthday.

Most accounts offer free gifts as an incentive to open the account. These range from teddy bears and birthday cards for young children through to vouchers and CDs for older children. These gifts are designed to attract new savers and potentially develop your child’s interest in saving money. However, it is worth looking beyond the free gifts to make sure that the account you have chosen is putting your child’s money to work as hard as possible.

Most deposit accounts can be opened with as little as £1 and offer instant access allowing maximum freedom for withdrawal. Notice accounts, as the name suggests, require advanced warning of your intention to make a withdrawal, sometimes you are limited to the number of withdrawals you can make in any one year. In return, the interest rate will be at a slightly better rate.

Bonds tend to offer the highest form of interest and can sometimes be at a fixed interest rate. A bond will tie the money up for a pre- determined period of time, usually a minimum of three years. Some run until your child reaches a certain age, the longer you tie the money up for the better the interest rate will be.

Making payments and withdrawals, as well as watching money grow in a Child Savings Account can help your child learn about the value of

savings and help them appreciate reaching savings goals. Good saving habits developed in childhood often help in the discipline of saving the deposit for their first home.