Cute name, but it’s the rate that counts

Abbey’s warns parents who are selecting children’s savings accounts to focus on the quality of the account, and not to be swayed by children-friendly gimmicks or cute names.

Some building societies and banks use child friendly names in their marketing, such as: -

Ladybird Club
Penguin Account
Wolf Pack Account
Stamford Lions Account
Ronnie the Rhino Account
Saversaurus
Dinosaver
Junior Viking

But it’s the rate that counts…

However, Abbey urges savers to check the rate of their children’s account. One in five children’s savings accounts currently pays less than 5.00 per cent AER, significantly less than the base rate. Alarmingly, three per cent pay less than the retail price index, meaning that children are losing money in real terms.

Reza Attar-Zadeh, Head of Savings and Investments at Abbey, said: “It is positive to encourage parents and their children to save from a young age. However, any decision on a savings account for children should be taken on the rate and specific terms and conditions of an account.

“Parents should never choose to save for their children’s future based on a cute name, or promotional items such as toys or a colouring book.”

Abbey’s offers a range of savings products for children, including its Children’s Savings Bond paying 6.25 per cent AER and Flexible Saver for Kids paying 5.55 per cent AER. Abbey also offers a stakeholder Child Trust Fund (CTF) and a cash CTF offering rates up to 5.75 per cent AER. Customers can apply by visiting abbey.com.