To celebrate its 200th year in business, Westpac is promising $200 for every Australian child born in 2017, provided a Westpac Bump Savings account is opened in their name by a parent or guardian.
The $200 will be deposited into these ‘Bump’ accounts, which the child can access by age 16.
Westpac said the Bump initiative is designed to encourage positive savings habits early in life and to help parents and grandparents kick start the financial future of the next generation.
The announcement coincided with the release of the Westpac Financial Future Report, which found 86 per cent of parents and grandparents agree that opening a savings account for children helps set them up for success.
“$19,000 in savings by the time the child turns 16.”
Westpac’s Consumer Bank Chief Executive George Frazis said the Bump initiative will inspire good savings habits with the potential to have a lifelong impact.
“Setting up our future generations for success will help Australia to thrive,” Mr Frazis said.
“Teaching children to save from an early age is known to have a positive impact on future financial stability, so we’re encouraging all parents and grandparents to help kick start this learning process and help them start preparing for a brighter future on this new year’s day.”
Mr Frazis demonstrated how much the accounts could be worth after 16 years at an interest rate of 1.5 per cent.
“By building on an initial $200 deposit at birth with a $20 contribution every week, for example, will potentially amass approximately $19,000 in savings by the time the child turns 16,” Mr Frazis said.
“That’s a significant financial head start for any child and can be put towards future education, life experiences such as a gap year or a deposit on a first home.”
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Westpac’s Financial Future Report also found that two thirds of Australian parents and grandparents believe children should be restricted from their savings until they are over 16.
“We’ve listened to parents and grandparents and believe the Bump Savings account will demonstrate the benefits of long term savings to young people, so by the time they turn 16, they might consider continuing to save their money,” Mr Frazis concluded.
How much will the Bump initiative cost Westpac?
There’s expected to be over 300,000 Australian births in 2017, with Westpac estimating around a quarter of babies born will take up the offer.
By those estimates, Westpac will be handing out a total of $15 million to 75,000 Australian newborns.
The $200 contributions will start being deposited from 8 April 2017, when the new Bump accounts are launched.
To be eligible to receive the money, the child’s Bump Savings account needs to be opened with their identification verified before 31 May 2018.
Parents or guardians of children born in 2017 can register their interest to open a Westpac Bump Savings account online at www.westpac.com.au/dearbump.
Be aware of the fees and interest rate
Westpac says the Bump savings accounts will have no monthly fees but admits that other fees may apply, with full details released once the accounts launch on 8 April.
Keep an eye out for what the interest rate will be, since this plays a big part in how much the account will grow over the years.
At the time of writing, these are the top 5 junior savings account interest rates on Canstar’s database:
|Top 5 Highest Interest Rates for Junior Savers – including conditional bonus|
|Institution||Account Name||Base Rate||Conditional Bonus||Total Rate|
|First Option Credit Union||Kids Bonus Saver||0.15||5||5.15|
|Select Encompass Credit Union||Kick Start Saver||5||0||5|
|Bankwest||Kids’ Bonus Saver||0.01||4.74||4.75|
|bcu||scoot’s super saver||0.75||2.75||3.5|
Rates as at 01/01/2017 for a balance of $200
Westpac Financial Future Report: Other Key Findings
The Westpac Financial Future Report surveyed 1,641 Australian parents, grandparents (of children under age 12) and prospective parents in 2016. This is what else it found:
- Parents’ main motivation for opening their child’s savings account from an early age centres around giving them a financial head start (55 per cent) and helping them understand the value of money as early as possible (46 per cent);
- 66 per cent of parents are worried about how financially savvy their children will be by the time they finish high school;
- For those parents/grandparents who didn’t have a savings account as a child, 74 per cent wish their parents or grandparents had set up an account for them during their childhood; and
- 71 per cent of Australian children under the age of five have a savings account.