Children's savings accounts don't always offer the best rates and require at least some intervention from parents to manage, so why open one? If your aim is to teach your children the importance and value of saving, a dedicated children's account can be a good way to go. Have a definite goal to save towards as accumulating money for the sake of it is unlikely to maintain motivation for long.
Remember that the main reason banks run these accounts is to tie your children into their brand early. So make sure you also introduce them to the benefits of being a rate tart and switch accounts on a regular basis to get the best deals.
If your goal is longer term (school fees, university fees, or even kick starting their pension), then a more formal investment vehicle is more suitable. To identify what options are available, the best bet is to consult an
Independent Financial Advisor.
Child Trust Funds were introduced by the Government to offer tax free savings and investments for children born after September 2002 who are eligible for child benefit. The government kick starts the fund with an initial £250 voucher at birth and another at age 7. Friends and relatives can then invest up to £1200 a year until the child reaches 18 when the policy matures.
Bear in mind is that once matured the funds legally belong to the child, not the parents...so there's a possibility that the funds could quickly be re-invested in a trip to Ibiza for them and their mates.
If you need more information to decide which savings account is the best for you, then check out
TheRateTart Guide to Savings.
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