Kids’ savings: Bank accounts for kids – the options
When it comes to kids bank accounts you need to decide what the aim is; do you want to teach your child to save or is the focus more on doing some serious saving? Although not without restrictions, there’s a host of good banking options for kids from the financial institutions – it’s a fun time to teach kids about savings, and there’s some serious interest to earn on the side. You can learn about the pitfalls of kid's savings and discover the banking options right here.
Kids' bank accounts: What to look for
Starting your children off early with banking can be a rewarding venture, since most banks are fiercely competing for new savers’ business – if a bank can grasp a saver young, they have a better chance of keeping a customer for life. Use this angle to your advantage and seek out the most competitive rate. In essence, you should be looking for:
- No fees (your child’s savings will probably begin small, so you definitely don;t want fees)
- The highest rate possible – it sounds obvious, but there are some really competitive rates available currently for kids and, just as a small savings fund suffers significantly from fees, it benefits equally significantly from a generous interest rate
- Any access limitations – do you have constant free access to your funds or will you be charged if you withdraw?
The great benefit of a bank account for kids is that they can get the full experience, including walking up to the bank’s counter and depositing funds themselves, which can be a boost in both confidence and their understanding of finance.
High interest savings accounts
If you do want to teach your kids the art of saving but don’t want to compromise on savings return by allowing your children to manage their own savings, you could consider a standard high interest savings account. This option will depend on the age of your child, as commonly there is an age restriction for standard savings accounts. For example the UBank USaver account can only be opened by someone over the age of 18. BankWest’s TeleNet Saver, for example, can’t be issued to anyone under the age of 12. Generally, if a child is saving themselves they probably won’t have too much money to begin with, so fees should definitely be avoided. Luckily, you should find that most kids’ bank accounts don’t have fees. Having said that, most adult savings accounts don’t have fees either, making this a more viable option. Furthermore, a lot of kids’ bonus accounts have strict rules around depositing in order to qualify for high interest.
Kids' savings accounts: What the banks offer
BankWest offers an interesting banking solution for kids with their BankWest Children's Savings Account and BankWest Kids' Bonus Saver. The Bonus Saver boasts Australia’s highest savings rate for kids, with no account fees, as you’d expect. Despite offering only a tiny interest percentage when the set amount (of between $25 and $250) is not deposited, if you do invest the necessary sum (and make no withdrawals) BankWest’s whopping interest rate of 8% p.a kicks in, making saving very lucrative. You can't earn interest on very high sums of money as at the end of each 12 month anniversary all the savings are swept into another account and your balance starts at zero.
ANZ’s Progress Saver has the handy function of being tied to your everyday account – you can set an amount to be delivered from your account to the Progress Saver every month and then not think about it again. It’s a good way to build up a healthy amount and maintain disciplined saving. However, it’s worth noting that ANZ’s interest rate doesn’t compare as favourably to BankWest’s. However, Commonwealth Bank offers an even lower interest rate with their Youthsaver account, at not even half that of BankWest Kids' Bonus Saver. There are different pros and cons to all savings accounts though - and accounts for kids are no different, so be sure to shop around.
Setting up a bank account for your child is a great idea and not only teaches them the balance between earning, spending and saving, but also helps you to get thinking about savings for your child in general. Don’t count out controlling a high interest savings account on your child’s behalf though as a means of building up some decent earnings, just remember that a high interest savings account must link to a transaction account. If you’re worried about missing the regular deposits on bonus kids accounts (and therefore the high interest), it’s probably a wiser move to compare the leading high interest savings accounts.