Are banks bullying our children with poor rates?
A few years ago, when you opened a children’s bank account, not only would your kid get a money box, pen set or calculator, they’d also get a half-decent interest rate. Sadly, that’s no longer the case.
In these straitened times, the piggy banks, pens and half-decent interest rates have gone the way of Spangles, the Sega Megadrive and Speak & Spell.
In our latest Which? Money research we’ve found that banks and building societies aren’t content with giving adults poor rates on their savings accounts, they are now hitting children in their piggy banks.
Pitiful interest rates
We found that the average rate for children’s easy access savings account was just 1.01%. Even worse, half of all easy access savings accounts pay 1% or less. First Trust’s Junior Saver account offering a pitiful 0.05% – that’s a shiny 50p piece for every £1,000 you save.
While there are some accounts out there that do offer decent rates, such as Northern Rock’s Little Rock account (3%) and several building societies offering 2% – these figures are hardly likely to enthuse the next generation of savers.
And returns aren’t much better for the now defunct child trust funds (CTFs). We discovered that rates were as low as 1.1%. And as CTFs are now closed to new savers, the chances are that these rates will decline further as providers concentrate their efforts on Junior Isas, which will replace CTFs in November 2011.
Invest in our future
Britain is not renowned as a nation of savers and, with rates as low as they are, it’s going to be pretty hard to convince parents to help their children to start putting something away from an early age.
A few months ago I wrote about how children need to be educated from an early age about financial matters, but how can we teach them about savings when the message from providers seems to be that they’d be just as well off keeping their pocket money in their piggy banks.
Banks and building societies have a responsibility to get children into the saving habit as early as possible. And if banks need any convincing, they should think of it as an investment in their own futures.
Treat the kids badly now and they won’t be coming back for all those juicy mortgages, packaged accounts and insurance policies when they grow up.
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