When it comes to kids? savings accounts, the good news is that there is plenty of healthy competition. It?s possible for kids to earn interest rates – on at least some of their money – that their parents can only dream about. Getting the best deal, though, means checking what?s available at least every few months and reading the terms and conditions of the chosen account carefully.
So what types of deals are available for kids? Here are a couple of examples at the time of writing – with the traps to watch out for – from the CANSTAR database:
- Bankwest offer a Kids? Bonus Saver account which currently pays 4.75% per annum, provided account holders deposit between $25 – $250 per month and don?t make any withdrawals. The trap? At the end of 12 months the account balance is automatically swept into a Children?s Savings Account, which pays significantly less interest at a variable rate (between 0.75% to 2.50% based on the total amount of savings). At that stage, kids need to reassess their options and look for a better deal.
- First Option Credit Union also offer a Kids? Bonus Saver account, paying 5.15% per annum on amounts up to $5,000, provided at least one deposit of $5 or more is made each month and no withdrawals are made. If you forget to make a deposit though, or withdraw some money during the month, the interest drops as low as 0.15%.
What traps should I look out for?
Some account features for parents to keep an eye on include:
- the deposit amount required each month in order to attract the “bonus” interest;
- the maximum account balance on which high interest will be paid;
- the timeframe that the bonus will be paid for;
- whether any withdrawals are allowed; and of course
- whether there are any account-keeping fees.
Sifting through the terms and conditions can be a great learning experience! You can find out more on how to find the right youth account for your kids here.