Kids Christmas savings crackers

With Christmas soon upon us and many relatives likely to shower kids with money, now is the time for parents to look for the best children’s savings account and preach the good practice of saving.

With five interest rate rises in the past 15 months, headline rates on savings are looking attractive, so there is huge incentive to put surplus Christmas money away and grow it into a good-sized savings pot for use later in life.

moneysupermarket.com research shows parents investing £50 a month in a child account paying 7.5 per cent AER could end up with a pot worth £18,155 after 16 years. With an extra £150 invested each Christmas, the child would finish with £22,544 – or over £4,400 more.

Kevin Mountford, head of savings at price comparison site moneysupermarket.com, said: “It is vital to educate children to start saving at an early age. While they may not be too keen to forsake the latest gadget for a savings account, our research shows tucking away the cash sent from relatives, albeit sometimes small amounts, soon adds up and can really help kickstart adulthood.

“There is a great selection of children’s savings accounts available with rates over the current Bank of England base rate of 5.75 per cent, and there’s an extra boost in the form of tax free interest."