Which children’s accounts top the class?

Parents are urged to do their homework on children’s savings accounts as their ‘little ones’ head back to school.

With a raft of great rates available on children’s savings, parents should, if financially possible, encourage their youngsters to save. With costs forever on the increase, it is more important than ever to educate children to put a bit aside each month.

Analysis from price comparison website moneysupermarket.com shows a child given £50 a month at 6.2 per cent AER for 12 years will end up with £10,584.

Kevin Mountford, head of savings at moneysupermarket.com, said: “There are some fantastic saving products on the market for children. Although kids may not be overjoyed at the thought of putting money aside, it is a great habit that should be encouraged if financially possible. Parents must ensure they choose the most appropriate account and make the most of their child’s tax exemption, which requires a simple R85 form being filled in.”

Parents should always read the small print. Halifax, for example, offers an outstanding 10 per cent AER on its Child Regular Saver account. However, if any of the 12 compulsory monthly payments of at least £10 are missed, the account will be closed. A year’s notice must also be given, making this unsuitable for anyone that might need quick access to their cash.

Kevin Mountford added: “An easy access savings account is best for those who like hassle free saving. Although the rates aren’t as good, providers such as Chelsea BS still offer 6.2 per cent AER. The account only requires a £1 balance and you can withdraw money as often as you wish.”

Parents whose children qualify for Child Trust Funds should make sure they invest their CTF voucher wisely and shop around for the most competitive fund. Britannia is currently top of the class, offering a fantastic 7.5 per cent AER. It is worth bearing in mind that when the child reaches 18, they will have full access to this pot.

Kevin concluded: “Good habits are best started young - children should be educated in the benefits of regular savings as early as possible.”