Best Youth Savings Account 2015
As children get older, it's likely they will take a more active interest in money. They'll probably want to manage their money online, which is where youth accounts come in.
Our winner in this category is the HSBC MySavings Account. Although the account has only recently increased its rate from 1% to 3% AER (on 1 September 2014), with such an improvement to the interest rate being offered, we simply couldn't ignore it. "It's a straightforward easy-access savings account that also comes with a current account offering those aged 11- plus a Visa debit card," explains Bowes. "The maximum balance that earns interest is only £3,000, so those who are regularly saving may also need to open a savings account alongside."
Our runner-up is, once again, the Norwich & Peterborough Building Society Family Young Saver account. It qualifies because children from the age of seven can open the account themselves. As before, parents, grandparents and guardians can also save on the child's behalf from any age, as a trustee.
Best Youth Savings Account 2015
Winner: HSBC MySavings Account
Current rate: Amount up to £3,000 = 2.96% gross/3% AER. £3,000 plus = 0.50% gross/AER Age range: Seven to 17
Minimum deposit: £10
Maximum balance that earns interest: £3,000
Access: Easy Access, manage in branch or by phone and online (MyAccount see below)
Other features: Comes with a 'cash' (paying in) book. From age 11, HSBC will also open a current account (MyAccount), which comes with a Visa debit card. Contact: 0800 032 4729 hsbc.co.uk
Highly commended: Norwich & Peterborough Building Society Family Young Saver
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
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.