Children’s Bank accounts are a rip off. See here.
Which? Money found that half of children's easy access savings accounts offer a measly 1% AER or less,
One, First Trust Banks Junior Saver account, offered a return of just 0.05% just one tenth of the Bank of England base rate.
That's just 50p pocket money for every £1,000 saved.
And what happens when this kind of return is offered?
It's not the tax free limits, but the poor rates of return on offer that are a topic of conversation on the Mumsnet forum.
''Even with budgets so tight, parents do want to teach children value of savings," said Mumsnet chief executive Justine Roberts.
"They may have very small amounts of money, perhaps its birthday money or money from their grandparents, but the rates don't incentivise them to save at all.''
I agree, we closed our bank accounts for the kids and then moved all that money into ISA’s for them. Stock and Shares ISA’s to be precise. Nothing wrong in getting the little they store in their bank accounts moved into more productive ways of investment and buy shares, investment trusts, ETF’s etc. all in a nice little tax efficient shelter. Anybody who has put their kids’ money in a savings account is literally giving up a huge amount of upside on their children’s future. So never put the money in a savings account. The only reason might be for very young kids who are interested to see a passbook and understand the increase in savings. But even that? dont do it, just get them into share ownership as soon as they are able. My son did that from 12 years of age. I am going to try to do that with Diya from next year when she turns 8. Lets see if that works out.