But, with so many children’s savings account to choose from, where do you start and how do you pick the best for your child?
Assessing the extra features that are included with an account can help. For example, some banks include great educational tools that encourage children to really consider their savings. The Commonwealth Bank’s School Banking scheme works with schools to help children enjoy saving. Children earn rewards according to the number of deposits they make and the schools benefit by receiving $5 each time an account is set up and 5% of the money deposited by their students.
It is also important to read the small print. If you are keen for your child to manage their own account, be sure to take note of any penalties, such as a drop in interest rate if your child makes a withdrawal.
If you simply want a bank account with the best interest rates, consider comparison site Mozo’s findings. It recently compared 35 savings accounts for children for its Experts Choice Awards. Here are its top accounts for children aged over 8 years with the best unconditional interest rates for 2017:
Suncorp Kids Savings Account – 1.50% standard rate of interest and a 2.75% special rate providing there is at least $20 deposited and no more than one withdrawal in any month.
Bank of Sydney Student Savings Account – 1.85% standard rate of interest
Beyond Bank Junior Savers Club Account – 1.80% standard rate of interest
Gateway Credit Union Dollaroo Savings – 1.65% standard rate of interest
For those able to put money away each month, a savings account with an ongoing bonus rate could be a great choice.
Here are Mozo’s top picks for 2017:
BCU Scoots Super Saver – 0.75% standard rate and 3.50% special rate, provided at least $20 deposited and not more than $5 is withdrawn in any month
Credit Union SA Children’s Savings Account – 0.25% standard rate and 3.25% special rate, provided a minimum of one deposit each month and no withdrawals
Greater Bank Life Saver – 0% standard rate and 3% special rate, provided the account balance increases each month
Hume Bank Clancy Koala Junior Saver – 0.01% standard rate and 2.76% special rate, provided there is at least $10 deposited and no withdrawals
For more information, see mozo.com.au/expertschoice/best-kids-savings-accounts
It is important to consider the tax implications of a children’s bank account. Interest earned in a children’s saving account is no longer entitled to any tax offsets. This means that any interest earned over $416 is taxed as earnings. There are some circumstances where this doesn’t apply – if your child is working full-time, for example.