5 Minute Guides To:
Children's Savings Accounts
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Last update : July 2010
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A Children's savings account is any style of savings account designed for those aged under 16.
Most of these accounts are either Instant Access style or Notice. What makes many of them a great deal for younger savers is that they can pay an excellent rate of interest, often higher than for savings accounts open to everyone irrespective of age.
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| Advantages |
- Higher interest rate - this is obviously the main advantage
- Interest rate more stable - The banks and building societies often love to move (up and down) the interest rate on their savings account without rhyme or reason. Usually the interest rate is far more stable with Children's accounts
- Simple products - When it comes to Personal Finance the simple products are normally the best as the banks can't hide any potential disadvantages in the smallprint. See secret number 3 - Buy simple and flexible which is one of this site's 10 Secrets to Good Personal Finance
- Internet banking - Most of these accounts come with internet banking and that's a great way to efficiently manage your money and financial commitments. Personally I love internet banking. See - 3 easy steps to safer internet banking
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| Disadvantages |
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| Where to buy |
| The Building Societies offer the majority of the Children's accounts and in my experience the best deals are normally found with the smaller societies.
At any one time there are probably about 10+ Children's accounts on the market so the trick is to sort through the rubbish to find the best deals. Therefore use our Top 3 Savings deals page which includes Children's accounts and is updated every Monday.
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| How to buy |
| Most accounts can be opened either online, via the phone or in branch. This means it's possible for someone living in one area of the country to open an account with a Building Society anywhere else in the country
Overall the account opening procedure is normally simple although you might be required to send some ID to the bank or building society in question.
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| Buying tactics |
| Regular savers might get an interest rate bonus
Some of these accounts come with the carrot of a higher interest rate for regular deposits. For example, pay a minimum of £10 a month in and receive an extra 1%. This is a great feature to be on the lookout for but make sure there are no small print catches if a regular sum isn't deposited every month.
Watch out for marketing gimmick accounts
Sadly some banks and building societies offer Children's accounts which pay a lower interest rate than some of their other accounts which are open to all savers. If so it makes little or no sense to use a Children's account, instead you should deposit your money in an account with a higher rate.
I think it is inappropriate for any financial institution to try to trick young savers into accepting a lower interest rate. But think positive because it will hopefully teach some of the youngsters at an early age that the banks can't always be trusted to play fair.
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| LearnMoney.co.uk comment: |
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On balance Children's Savings accounts are good products as -
- They often pay a great rate of interest, and
- They try to encourage saving from an early age
The only point to be on the lookout for is where the interest rate paid on a Child's account is less than offered on some of the bank's other savings accounts.
PS. Don't forget to find the best savings deals head over to the LearnMoney.co.uk Top 3 Savings Accounts section which is updated every Monday and includes -
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Current Savings Deals
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Read more in the Banking & Savings section:
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