Best Children's Savings Account 2014
All children should have a simple and straightforward savings account that pays a decent rate of interest and offers instant access to their money.
These can be a great way of teaching kids the benefits of saving, an understanding of how interest works and can help them meet their own savings goals - be that a new bike or a contribution to their school ski trip.
Tax won't usually be a concern unless money paid in by one parent generates interest in excess of £100 a year (in which case tax will be applied at their rate) or in the unlikely event of the child's income exceeding their personal allowance (which is the same as adults).
Judge Anna Bowes, director of Savingschampion.co.uk, says: "We looked at all easy-access accounts available nationwide and picked the accounts that we feel have offered the best returns over the past two years."
The award this year goes to Beverley Building Society. "The account is available nationwide as you can manage it by post - unless you live in East Yorkshire - and the rate has remained consistent at 2% since 1 July 2011," says Bowes.
The runner-up in this category is the Young Savers Account from Lloyds and TSB. "This would have been our winner, but the big caveat on this account is that in order for a child to open it, the parent or guardian also needs to have a Lloyds or TSB current account. The rate is a market-leading 3% AER and has been since its launch in August 2011, so it has remained consistent even though savings rates have been plummeting."
Best children's savings account 2014
WINNER: BEVERLEY BUILDING SOCIETY YOUNG SAVERS
Current rate: 2%
Interest paid: Annually
Minimum deposit: £1
Maximum balance: £350,000
Contact: 01482 881510
HIGHLY COMMENDED: LLOYDS AND TSB YOUNG SAVER
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.