With interest rates on child savings account so low, it’s difficult to know where the best place to put your children’s money is.
Research into children’s savings accounts by Moneyfacts found that some interest rates on accounts were as little as 0.1% per year. The average amount of yearly interest paid on a typical child savings account has also fallen from 1.61% in 2015 to 1.39% this year. But despite such poor rates of return, parents are still being urged to encourage their children to save.
Variable Rates
Children’s savings accounts (and most adult savings accounts) which have a fluid or variable interest rates have had their interest reduced as the Bank of England reduced the base rate back in August. Rachel Springall of Moneyfacts said:
"As the majority of child savers pay variable rates, they are in danger of rate changes at any moment, so it's worthwhile to be diligent in checking the savings pot on a regular basis and not put up with any paltry interest."
Where Should Your Children Save?
Junior Isas (JISA) provide a decent rate of return, with the best JISA interest rate staying at 3.25% for the past few years. These Isas allow family members to pay in cash, or invest in stocks and shares for children. Many of these accounts require a fixed level of saving however. The top paying variable account for children also pays 2.96% interest. Both of these rates are variable and are liable to change over time.
If you would like more advice on the best place to put your childrens’ savings, please get in touch.
