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Savvy kids say saving money is easy with great interest rates
29 June 2016
Canstar analysis has found that the youth saver market is quite competitive, with financial institutions hoping to gain customer loyalty early on.
Our latest research for the Junior Banking and Youth Banking Award has shown the market for children’s bank accounts is getting increasingly competitive, meaning better interest rates for young but savvy savers.
There are a good number of fee-free savings accounts paying well above the standard base interest rates. While savvy adults and self-funded retirees have to actively search for bonus savings accounts or term deposits that will pay more than 3%, cash-savvy kids have plenty of choices. Their parents should be so lucky!
Compare interest rates on kids savings accounts
Aussie kids want to save money
More than 2 in 3 kids (68%) would rather save their money than spend it! According to the 2016 Common Cents Quiz by CommBank, 82% of kids are expected to do some chores to earn their pocket money, so they really value what they get.
But there’s still room to grow for Aussie kids when it comes to learning how to manage money well. Only 1 in 2 kids actually understands what a budget is. What’s more, the majority of kids in the study preferred the instant gratification of $5 now, rather than receiving a greater reward of more money later (delayed gratification).
Parents can work through the Common Cents Quiz with their kids by printing it off here. CommBank has more resources and activity sheets for parents and teachers on their website The Beanstalk.
Interest rates on kids’ savings accounts
Whether child or adult, it is important to shop around, with Canstar research finding significant differences between the highest and lowest interest rates on savings accounts.
On online bonus savings accounts, for example, interest rates can differ by more than 3.25% – and in the current low-interest environment, every penny counts. In fact, the minimum bonus rate on online savings accounts is a mere 0.15%, far less than inflation, which is 1.30% at present.
And as for bonus savings accounts for children under 12 (Juniors), our database shows that in 2016, the difference between the top total rate and the lowest total rate is more than 5.00%.
| Base Rates | |||
|---|---|---|---|
| Balance | Minimum Rate | Average Rate | Maximum Rate |
| $500 – $1,000 | 0.00% | 1.09% | 5.00% |
| Total Rates | |||
| Balance | Minimum Rate | Average Rate | Maximum Rate |
| $500 – $1,000 | 0.10% | 2.13% | 5.15% |
| Source: www.canstar.com.au. Interest rates are current as at 15 June 2016. Total rates are the sum of the base plus bonus rates. |
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You want your kids to have the opportunity to watch their money grow, instilling a love of saving, rather than having them disappointed with receiving small reward for their efforts. Comparing your options can make all the difference for your kids.
Fees on kids’ savings accounts
Don’t forget to check what fees are charged on any account. Our 2016 research found the following spread in terms of fees charged on accounts in our database for children under 12 years old:
| Junior Savings Account Fees | |||
|---|---|---|---|
| Minimum | Maximum | Average | |
| Eftpos transaction fee | $0.00 | $2.50 | $0.13 |
| Branch withdrawal fee | $0.00 | $20.00 | $1.48 |
| Account-keeping fee | $0.00 | $3.00 | 0.04 |
| Source: www.canstar.com.au 1. 10 of the 69 accounts eligible charge an Eftpos transaction fee. 2. 32 of the 69 accounts eligible charge a branch withdrawal fee. 3. 1 of the 69 accounts eligible charges an account-keeping fee. |
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What about accounts for 13 to 17 year olds? Our database shows the following fees:
| Youth Savings Account Fees | |||
|---|---|---|---|
| Minimum | Maximum | Average | |
| Eftpos transaction fee | $0.00 | $2.50 | $0.11 |
| Branch withdrawal fee | $0.00 | $20.00 | $1.25 |
| Account-keeping fee | $0.00 | $6.00 | $0.11 |
| Source: www.canstar.com.au 1. 10 of the 85 eligible youth savings accounts charge an Eftpos transaction fee. 2. 34 of the 85 eligible youth savings accounts charge a branch withdrawal fee. 3. 2 of the 85 eligible youth savings accounts charge an account-keeping fee. |
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Here at Canstar, we research several aspects of children’s bank accounts to help you find the right one:
- School Banking: School-run programs from financial institutions to help your Under 12s learn how to save money.
- Junior Banking: Kids bank accounts designed for young kids up to tweens or Under 12s.
- Youth Banking: Bank accounts designed for teens or Under 18s.
- Term Deposits: Children may be eligible to open a term deposit if their parent opens the account with them.
For more information about what to look for in a child’s bank account, come to us! Or you can compare your options on our website with our report for the Junior Banking and Youth Banking Awards. In 2016, we rated 29 institutions in terms of the products and services they offer to Australia’s juniors and youths.
Compare Junior Banking and Youth Banking Accounts
https://youtu.be/DtDSGs67zBA
Source: CommBank
Canstar’s 2022 Outstanding Value – Junior & Youth Banking Awards recognise the institutions offering outstanding value to Australian consumers through their suite of junior and youth banking products.
