Parents will often open a bank account or perhaps a series of accounts for their children. They might pay money in regularly, put birthday money in there or let their children decide whether they want to save their pocket money in there or spend it. It can be important to get your child familiar with the idea of banking so they can learn for when they get older and it is something that they will have to do. However, choosing the right bank is not easy. There are lots of places offering accounts to children and it is really important to get it right for a number of reasons.
The interest rate on children’s accounts can vary a lot and it can be bets to try to get them the best interest that you can. This will allow them to be able to get a good return on their money. Children’s accounts do tend to offer quite generous rates, but you will need to think carefully about what you choose. You can get an instant access savings account where they will be able to draw out their money right away. You can get a trust fund, which is often linked to the stock market and with those the money will be tied up until the child is eighteen years old. You can get an ISA which will have tax free interest, although it is highly unlikely children will have to pay tax on interest anyway. You can choose premium bonds although they may not provide any return at all if the bonds do not win the draw.
It is a difficult decision to make and you may even decide that several accounts might be the way to go. Perhaps something for more long term use and something for every day use. As the child gets older their needs will change too. As a baby they will not need to spend money as their parents will do it for them, but as they get older they may want to buy things for themselves and they may need access to their money to be able to do that.
As well as getting it right so the child gets as much interest as possible, there is a further burden on the parent choosing. This is that a child is likely to continue banking with the place that they banked with as a child when they become an adult. This means that they will need to think about whether they want their child using that bank. It is therefore wise to also think about the reputation of the bank and what they offer to all customers and think about whether you feel they will be a good choice. Consider whether they tend to be competitive on all of their products and whether they offer a good range of items.
You may also want a bank that has a local branch so that your child can go in and experience face to face banking so whether the staff deal well with children could also have an impact on your decisions. Although online banking is the norm, it is not something that tends to be possible with kids accounts and so they may have to have one where they can go into a branch to pay in and take out money. They will not be able to use a cash machine as they will not have a bank card and so this could limit them unless they can go to a branch in order to do this. Paying in can also be easier if there is a branch, especially if they are likely to be paying in cash which children are more likely to be doing.