Which is the best regular saver for children?

LucyB3

Hi,
I am hoping someone can help me!
I already save £100 a month for my son at the Halifax in their young saver account at 3% (or something). I am wanting to open another saving account for my daughter and just wondered if this is still the best one or if there is a better one? I did have the regular saver at 6% but heard the young saver was better due to the interest being on the total, not monthly payment (I think that is right, but could be wrong. Hence coming on here asking for help 😳!) I am hoping to put away the same amount for her too?
Thank you in advance!
X

xylophone

Are you also using the Halifax JISA?

Westie983

Young saver rate has dropped to 2.25% but yes the interest is paid out annually on the total balance up to the limit of £20,000.

The kids regular saver is still at 6% for up to £100 a month, for 12 months.

colsten

LucyB3 wrote: »

I did have the regular saver at 6% but heard the young saver was better due to the interest being on the total, not monthly payment

That seems to be an urban myth, spread by people who don't understand how interest rates work, and/or that you only get interest on the amount of money that is in the account at the end of each day (which is what interest will be calculated on).

The facts are simple: an account with a higher AER pays more interest on the same money than an account with a lower AER.

Scenario 1:
If you have £1,200 available today:

• you can put it all into the Young Saver and it will have earnt £27 gross by the end of 12 months
• you can put it all into the Young Saver and then drip-feed £100 into the Regular Saver. This will earn £51 gross at the end of 12 months across the 2 accounts, almost 100% more than if you'd just left the money languish in the Young Saver.

Scenario 2:
If you have more than £1,200 to start with, you can put it all into the Young Saver and still drip feed £100 a month into the Regular Saver so that the total interest at the end of the year will be £24 gross more than if you used the Young Saver only.

Scenario 3:
If you don't have a lump sum to start with and just save £100 a month, the interest you will get at the end of the year will be

• £14.58 gross in the Young Saver
• £38.65 gross in the Regular Saver

Do your own calculations using the MSE Regular Savings calculator.

jimjames

I'd say the best regular savings for a young child would be a investment plan either in JISA or investment trust. Over the timescales it's likely to do far better than cash.

pinkdalek

LucyB3 wrote: »

Hi,
I am hoping someone can help me!
I already save £100 a month for my son at the Halifax in their young saver account at 3% (or something). I am wanting to open another saving account for my daughter and just wondered if this is still the best one or if there is a better one? I did have the regular saver at 6% but heard the young saver was better due to the interest being on the total, not monthly payment (I think that is right, but could be wrong. Hence coming on here asking for help 😳!) I am hoping to put away the same amount for her too?
Thank you in advance!
X

Halifax's Kids Regular saver rate at 6% is fixed for the 12 months, so if starting from scratch it is a decent return. Then after 12 months look at investing what you have saved into something else, eg JISA.