Savings Accounts for Children - doing better for them

matt.j_3

I have two children, 8 and 10 years old. They both have over £5000 each in their savings accounts that we set up for them when they were born. Over the years they have put birthday and Christmas money in, and they both got a little bit from a family member who died and left them something to them in their will. They have also had some withdrawals too.

Currently both sets of grandparents and my wife and I contribute £20 each monthly to their savings accounts to the total of £60 each child.

The interest rates in the accounts they both have stinks (0.1%), and my wife and I have been poor at monitoring them to get the best for them but we acknowledge we need to do better for them.

We need to understand and find some better options for them. We don’t want to tie their accounts up for a fixed long period as we do allow them small withdrawals occasionally, but we want to gain much better interest for them.

I wanted to post to the forum to ask any other parents who have had a similar what they considered and decided so they better look after their kids savings.

Thanking you in advance.

sevenhills

With over £5,000 each I think investing in shares or unit trusts would help them to learn about something that they never even think about.

Maybe half of it, in a few well-known companies. A child can have a cash junior ISA and a stocks and shares ISA

MX5huggy

https://www.moneysavingexpert.com/savings/child-savings-tax-free/

So mine are similar ages, and we’ve not got it perfectly correct but basic is they have a HSBC My Savings account that is for “their” money that’s money they know about and can spend on what they like (within reason) pays 2.5% no requirement to fund it every month. At 11 HSBC add a current account with card and online banking just like adults. 

Then they have some premium bonds that they are not generally aware of and a Child Trust Fund in stocks and shares which I intend to move to a cheaper (fees) JISA probably with Fidelity invested in a Vanguard fund as there is no platform fees with Fidelity for JISA’s instead of direct with Vanguard which has a 0.15% platform fee on top of the 0.2 fee for the fund chosen (tip I got yesterday on here). I have just started the JISA for the younger one. 

The current strategy is to bring the younger ones “savings” up to a level that match’s the eldest but perhaps reflecting the 4 years between them. 

refluxer

You can definitely do a lot better than 0.1% for an instant access children's savings account. You can currently get 2.5 - 3% on balances between £2k - £3k with Santander/HSBC/TSB for example and, for larger amounts, Barclays do one at 1.51% (up to £10k)

For regular payments like the ones you're making, I would definitely consider a Children's Regular Saver - you can currently get 3.5% for monthly contributions of between £5 and £100 with Barclays and Halifax. Opening both of these for my kids was an easy option for me because I was already a customer of both banks. I pay in by standing order so they are very much 'set and forget'.

Regular Savers work best if you don't make withdrawals and many don't allow it. For example - if you withdraw cash from the Barclays regular saver, then the interest rate takes a hit for that month and you can only withdraw from the Halifax account by closing it. For this reason, you'd want to run them alongside another savings account from which you could make any withdrawals but you'd need one of these anyway, as you can't pay lump sums into Regular Savers.

The top children's savings accounts can be found here : https://www.moneysavingexpert.com/savings/child-savings-tax-free/

Note that many childrens' accounts can be branch or branch/post only, so there could be advantages in choosing one that has a branch close to you. 

You can also get up to 2.5% with a Junior Cash ISA for longer-term savings and stocks and shares ISAs are an option too, depending on your attitude to risk. Money is locked away though and automatically becomes their's to do with how they wish once they hit 18. 

Nurse2047

We use Santander mini 123 account as pays 3% up to £2000 and they have a Cash JISA of £5000 each looking to transfer into a S&S ISA (either Vanguard or Fidelity). We pay £25 a month into their premium bonds also as you just never know your luck Ours are 10 and 11 yrs old. 

matt.j_3

Great, that gives me some basic ideas. It seems that most accounts that don't fix you in currently limit the higher interest to only a portion of the amount in there, but at least that is better than 0.10% for all of it :-).

jaybeetoo

If you want to do better for your children then consider investing.  Historically, investing has provided much greater returns than saving over the long term.