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Which Child Saver Account is the Best?

Looking for a good savings account for your child can be quite tricky. Savings rates tend to be higher for children’s accounts and so this can mean that it is certainly worthwhile finding them an account especially designed for children. However, there are a range of accounts form trust funds to instant access accounts and it can be difficult knowing what to choose.

It is worth thinking about what type of account to get your child and whether you might want more than one. Some of the options are listed below –

• Instant access savings account – these accounts are popular as children can pay into them as often as they like and also withdraw money when they like. It allows them to get used to how banks work and they can use it to pay in pocket money and save up for things. Many banks and building societies offer these accounts. Often you only need £1 to open the account and can pay in any amounts of money, meaning that it easy to use.
• Child trust fund – a child trust fund will lock up money until the child is 18. This means that any money that they put in will not be able to be withdrawn. It is usually possible to invest in the stock market or in cash with these funds, with the cash ones not really giving a good return compared to other options, but the stocks and shares could give a good return if the market does well. They could be more of a gamble but if the money is held in the account for a long tie then there is a good chance that they will increase in value. Tying the money up until the child is 18 means that they cannot withdraw it and spend it on unimportant things that they might regret at a later age. When they do turn 18 then they could use the money to help them through university so they can have a lower loan or for a deposit on a rental property or towards a mortgage. They might alternatively want to spend it on driving lessons and a car so they can get to work easily.
• Premium bonds– premium bonds will also lock money up but until the child is 16. The money in premium bonds does not earn interest but is used to purchase bonds that are entered in a draw each month to win various monetary prizes. These tend to favour those with more money invested as that will increase their odds of winning a prize. It can mean that there is no return at all on the money but it could mean that they get a big return. It will depend on luck.

Once you have decided on what type of account or accounts you feel would suit your child you then have to pick between the different providers. There are many that offer children’s accounts because they hope that they can get loyalty form that child who may then keep their money with them as they get older. Rates are therefore pretty competitive. They do vary though and they may change as well. So, if they have an instant access account make sure that you keep an eye on changes in the market as there may be better rates available if they swap to a different bank or building society.

There are websites which compare the rates of savings accounts including those designed for children and so these can be very useful, both in choosing the accounts to start with and then tracking them to see which are the most competitive with regards to interest rates. They can be useful places to visit and to keep track of whether your children are getting the best rates they can.

Of course, there may be other factors that might determine who you go with. You may like it to be a place that has a local branch so your child can go in and pay in their money and handle the coins and chat to the teller. This is all part of showing them how finance works. You may not worry so much about this if you feel that the future will be online banking anyway and so it could be unlikely that they will want to go into a bank when they are older anyway. You may also be interested in the reputation of the bank or building society, whether you feel you can trust them and if you have heard of them. Alternatively, you may want them to use the bank that you currently use. It is worth having a think about your reasons for wanting them to use certain banks or building societies and whether those are good reasons. If you do not know the ones with the best interest rates then take some time to find out more about them before you dismiss them.