Children's accounts need shake up, according to Moneynet.co.uk

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Children's accounts need shake up, according to Moneynet.co.uk

Thu 12th Nov 2009

Banks need to create a more competitive rate of interest on their children's accounts if they want to encourage more savers, according to Moneynet.co.uk.

In a study carried out by the finance website, it was found that the average rate of interest on a children's account was 0.98 per cent on an investment of £1,000. Around four out of ten accounts provided a return of 0.50 per cent or less.

Andrew Hagger from the website said: "Paying interest of less than £10 per year on a £1,000 savings balance isn't enough to get the younger generation visiting their bank on a regular basis".

Savings accounts provide a more profitable rate, with up to six per cent from Halifax for a £10 monthly payment for a year.

The government-back Child Trust Fund (CTF) provides a higher rate of 2.36 per cent on average, with some institutions offering a bonus if a certain amount is invested each year.

Any adult can open a CTF for a child, which keeps the investment in the account until the child's 18th birthday, even if they are not related to the child.

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