Children’s savings accounts that deliver
JUNIOR savers are able to score healthier returns on their cash savings tucked away in the bank than their adult counterparts.
Interest rates have continued to take a hit in 2019 after three
Reserve Bank cash rate cuts but young savers can still collect interest rates of up to 3.75 per cent.
Analysis by financial comparison site Mozo found there are many junior accounts offering returns in the high 2 per cent range or above, but the site’s spokeswoman, Kirsty Lamont, said often they come with strict terms and conditions.
“Kids’ savings accounts can be a bit of a minefield,” she said. “Things to watch out for include restrictive conditions that can stop your child from earning the maximum rate.”
“There can also be monthly account fees and features like automatic sweeps that might sweep your child’s savings every 12 months into a lower-paying account, so there’s lots of traps to watch out for.”
Having junior accounts is a good way to teach kids about cash, said Suncorp’s executive general manager of deposits and payments, Bruce Rush, and junior savers are depositing about $20 per month.
“But as we use less cash, money isn’t always something kids feel and touch, so it’s important we bring money to life,” he said. “The old jam jars are a good way to do it.”
Lisa Naumann set up bank accounts for her children, Anna, 7, Madeleine, 5, and Sam, 2, and the older two children also have spend, save and give jars, as well as a money box to tip their pocket money into each week.
“The girls have a set amount of jobs they need to do, on a magnetic whiteboard, which includes things like making their bed and putting their shoes away,” she said. “In return if they do all of those jobs every weekday, they will earn 50 cents per day, so up to $2.50 per week.” Mrs Naumann said it’s vital they learned “they don’t just get toys for nothing”.
Mr Rush said there was no set amount of pocket money to pay but establishing clear guidelines was key. However, it’s important to choose a child’s bank account wisely.
Just recently kids’ money programs including Dollarmites came under the microscope of the corporate regulator, the Australian Securities and Investments Commission. It showed such programs resulted in kids sticking with these banks as adults but failed to make them savers. Account
Youth Saver
Young Saver Scoots Super Saver Children’s Savings Account
Smart Saver Account Interest rate 3.5% 3% 2.76% 2.7%
2.55% Conditions on up to $5000 on up to $5000 on up to $50,000 minimum one deposit monthly minimum $10 deposit monthly, excluding interest