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‘Not child’s play’: Are kids’ saving accounts worth your time?

savings account, children, kids, worth your time

Some kids’ savings accounts could see savers accrue nearly $1,200 in interest over their school years, but it’s important to read the fine print.

Research from comparison site RateCity has revealed that kids’ saving accounts are a mixed bag, with some earning thousands of dollars and others automatically sweeping money into lower-interest accounts.

“Our results showed kids savers are definitely not child’s play. They are riddled with all kinds of terms and conditions that adults would find hard to understand, let alone children,” RateCity spokeswoman Sally Tindall said.

“If you don’t meet the bank’s strict terms, they will drop your rate faster than you can say Peppa Pig.”

The research was based on a $5 weekly deposit every week from kindergarten to year 12.

It found Nexus Mutual’s Junior Saver account offered the best deal, with a maximum rate of 4.35 per cent earning $1,169.

RateCity noted that Nexus Mutual didn’t offer the highest rate, with Bankwest’s Kids Bonus Saver Account offering 4.75 per cent.

However, in addition to tough terms and conditions to qualify for the top rate, this account also features an automatic sweep facility, which funnels money into a lower-interest savings account annually.

This means that kids who deposit $5 a week every week over their schooling will earn a more modest $307.

“The Bankwest offering sounds great on the surface, but do a bit of digging and you’ll find an account riddled with complicated fine print,” Ms Tindall observed.

Other funds have rate caps, offering the higher rate only up to certain balances like $5,000, while others will only offer the high interest rates until the children reach high school age.

Give me the numbers

Bank Kids savings account Max rate Fine print and conditions Total interest earned
Nexus Mutual
 
Junior Saver
 
4.35%
 
Minimum deposit of $2 per month and make no more than two withdrawals during the month. Lower rate for balances over $5K.
 
$1,169 
CUA Youth eSaver
 
4.00%
 
No conditions attached to bonus rate. Lower rate for balances over $5K.
 
$1,057 
Endeavour Mutual Bank
 
Young Saver Account
 
3.50%
 
No conditions attached to bonus rate. Lower rate for balances over $5K.
 
$904 
Credit Union SA
 
Children’s Savings Account
 
3.25%
 
Must make at least one deposit and no withdrawals each calendar month to get bonus rate.
 
$830 
First Option Credit Union
 
Kids Bonus Saver
 
3.00%
 
Must deposit at least $5 and make no withdrawals each calendar month to get bonus rate. Lower rate for balances over $5K.
 
$757 

These figures are based on the assumption of $5 weekly deposits from kindergarten to year 12, with no withdrawals. 

Kids who deposit this amount would have saved around $3,380 by graduation. 

How do I choose?

RateCity said there were several questions to consider.

The amount the child or caregiver is likely to deposit each month is the first question, followed by the likelihood of withdrawals.

Then, caregivers should consider the fine print, bearing personal circumstances in mind. If savers can’t meet the criteria every month then the account probably isn’t for them.

Rate and age caps should also be considered.

Finally, RateCity said savers should review their account every six months and consider switching to better options.

‘Not child’s play’: Are kids’ saving accounts worth your time?
savings account, children, kids, worth your time
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Anonymous - Why does this get all the media attention when in reality it affects very few and the charges are minimal? How about reporting on all the ISA TPD.......
Anonymous - This got to be the smartest comment this century ?!....
nan - So what do you do if you are being ripped of and then can't afford the body corporate fees....
MarkL - The banks may not charge dead people any more ........... but they won't charge them any less either!....