Why poor savings rates for children?

opinions4u

Hamstar wrote: »

My 13 year old daughter has a substantial sum in a Nationwide Smart account earning only 0.75% interest. It appears that she cannot run an internet savings account (minimum age is 16)

Halifax will allow 11 years and upwards to access their online accounts. Web Saver Reward pays 2.5% but restricts withdrawals to 4 a year (dropping the rate to naff all on a 5th). They also do an Expresscash account paying 1.51% AER which provides Electron/ATM card, instant access and internet management option. My youngest has his savings in the Web Saver and the day to day spending money in the Expresscash (which is his pride and joy!).

and all the high street account interest rates (including trustee) are derisory.

Take a look at www.moneyfacts.co.uk and look at the children's account option.

I then thought that I could open an internet account in my name (earning more like 3%) but nominate the account as “Account for daughter xxx”. All the interest on this (her transferred Nationwide) account would be declared on her tax return, but I wonder if this would create problems when the building society report back to the Inland Revenue - the accrued interest in my name? Is this allowed?

Fairly sure that it would be classed as your income.

Why should children get such a raw deal with their money?

Compared to the BofE base rate they are getting a great deal. Compared to some of the new savings accounts coming out it's not so good. The main reason is that banks are desperate for your money. Paying high rates that attract £5k or £10k gets it. Paying high rates to get £30 of pocket money doesn't.

I do not want to tie the money up in a bond, regular savings or fixed term.

Consider it though. 6% for saving a tenner a month is superb!

anselld

realaledrinker wrote: »

Completely wrong advice - see above!!

Not completely wrong! ... But certainly needs to be taken with my previous post, ie be prepared to pay tax on it as if it was your own.

Hamstar

Coventry BS Poppy Save details confirm a minimum age of 18 - so dismissed. The online application to Halifax websaver reward was straightforward using my daughter's details. I await their welcome pack with interest.
Thanks for recommending the Skipton bond (albeit short term and not instant).

Hamstar

Skipton have pulled their 3.45% bond expiring 28.2.10. A new one launches tomorrow @ 3.2% until the end of April 2010.
Halifax have signed my daughter up for the web saver (paying 0.25%) but says that the account will be a web saver reward (2.5%) if arranged before the 19th July. The idiots at my local branch had no idea of this when I presented identity documents today. What's the betting that my requested reward account ends up being an ordinary account with lousy interest. The activated online account makes no mention of web saver reward, let alone confirm the interest rate. All par for the course in the current hunt for the best interest rate game within the 48hrs between account launch and closure.
Any new ideas or suggestions to the questions posed at the top of this thread?

martinman3

Yorkshire BS will be launching new 3,4 and 5yr fixed rate bonds tomorrow, 17th July, at 5.00%, 5.15% and 5.40%, £100 min.
https://www.emoneyfacts.co.uk/news/savings-news.aspx?newsarticleid=187506

Previously, I believe that YBS allowed children 11yrs and above to open bonds in their own name. It is worth checking if they are still allowing this, can probably be held in trust if not.

chookie1

Investec certainly allow children (with adult as trustee) to have a High 5 account.

One thing that's occurred to me is that even if you are taxed when you put your savings in your child's account - the £100 rule - they are treated as a separate person from the point of view of the FSCS so you can put away another £50,000 in a high interest account and still be protected.

herbertthehelper

saving-mad wrote: »

it was more really the face that can i give money to the children and then effectively take it back?
i am a non tax payer myself so would not pay tax on savings in my name

Make them in your childs name?

saving-mad

herbertthehelper wrote: »

Make them in your childs name?

thanks,
a little background info, my 2 teenagers have £5000 each in halifax save 4 it on 1.5% or simular, they also have £10000 each in nationwide smart, i have a halifax guarenteed saver on 6% until November and thought i might take there savings into it, then give it back when the rate finishes.
any thoughts would be helpful

opinions4u

saving-mad wrote: »

thanks,
a little background info, my 2 teenagers have £5000 each in halifax save 4 it on 1.5% or simular, they also have £10000 each in nationwide smart, i have a halifax guarenteed saver on 6% until November and thought i might take there savings into it, then give it back when the rate finishes.
any thoughts would be helpful

I'd do it. The interest would be treated as yours for tax purposes, but it looks like a good move to me.

medindexer

So, following on from this discussion about decent rates for children, are there any 2 or 3 year fixed rate bonds that definitely qualify for a child of 13. I want to put in about 8K jointly in my and my sons name.