The Current Top 4 Bank Accounts For Kids
- All Ages
Do you need to open a bank account for your little one but you're not sure where to start? We’ve got you sorted!
Australian banks might be suffering their darkest days and it can be hard to know who to trust when it comes to our children's hard-earned pennies. But don't worry, we’ve scanned all the websites of the big banks and not-so-big banks to bring you what we believe to be the best bank accounts for little ones (current at the time of publication, Aug 2019).
Endeavour Mutual Bank: Young Saver Account
This is probably our pick of the crop. With a whopping 3.25% per annum (p.a). interest on balances up to $5,000 p.a. (and 1.75% on balances from $5,001 to $10,000), no minimum deposit amount per month and no account keeping fees, what’s not to like? This bank account is available for children from 0-17 years of age.
The Young Saver is great for teaching your child about the fundamentals of money. It can help establish good habits for saving and spending. Their customer service is second to none, too. When kids join, they receive numerous gift packs (my boys were each given a football, educational kit on understanding currency and savings, a backpack, pens and crayons). They also, very importantly, still have a coin-counting machine, which means your little ones can take their piggy banks in to be deposited. A wonderful opportunity to help get the savings bug into your kids.
I also appreciate that as a parent, I didn't have to set up a fee-paying account before opening one for my children. I did, however, have to become a member, which didn't cost anything and has no ongoing fees or charges.
BCU: Scoot’s Super Saver
The Scoot Super Saver offers a total interest rate of up to 2.76% p.a on amounts under $50,000. Anything above that gets a rate of 0.26% p.a.. Plus, there's no account fee, but the parent, grandparent or guardian who opens the account must already be a customer. This bank account is available for children up to 13 years of age.
Bankwest: Children's Savings Account
The Bankwest Children's Savings Account makes it easier to save, with a variable 2% p.a. interest rate on balances over $20,000. Available for children up to the age of 15, a parent or guardian needs to manage the account on behalf of the child. There are no fees or maintenance charges for this account.
Westpac: Bump Savings Account
The Westpac Bump Savings account offers a total variable interest rate of up to 2.10%. This rate comprises a standard variable rate of 1.10% p.a. and a bonus interest rate of 1.00% p.a. Bonus interest is earned if you make a deposit to the account (there is no minimum deposit amount) and the account balance is higher at the end of the month compared to what it was at the beginning of the month. It also includes a Parental Control feature which allows you to decide how much account access you’d like your child to have – handy for helping your children develop good savings habits and a sense of independence. This bank account is available for children up to 18 years of age.
Piggy banks and other important things to consider
Recently we discovered (the hard way) that many of the Big Banks such as St George and ANZ no longer have coin machines. I find this incredibly disappointing. I have strong childhood memories of taking my piggy bank into the branch and I loved seeing the numbers on my passbook grow! For me, this is a missed opportunity for kids. ANZ request that you count and bag the money yourself before coming to their branches. Some parents with older children still may find value in this exercise.
St George no longer has Happy Dragon Accounts, instead, they offer an incentive saver which is more about future plans. Bye-bye friendly green dragon (remember the old ads with Julie Andrews – or am I showing my age?!)
Be sure you understand what the banks are doing with your kid’s information, too. Whilst CBA has probably the most famous of all kids' accounts – the Dollarmite – they currently do not offer the most attractive rates and, according to The Barefoot Investor, they will automatically offer your child their first credit card at 17. This is not something I want for my kids personally. Whilst your school may have an affiliation (class banking) with the bank, again, please understand the motivations behind it are not to encourage your child to have good banking habits, they are to encourage your child to form an attachment with CBA. You may be ok with that, and that’s fine. It’s just great to understand the situation in its entirety.
Be mindful that many banks will require the parents/guardians to also hold an account with them. These accounts often attract fees and charges, so it's best to understand what that will cost you and what the restrictions (if any) will be.
And finally, remember, it's OK to change as many times as you like. Gone are the days of personal relationships with your local bank manager. Banks constantly change their rates, so don’t be frightened to follow the best rates and change account/banks as you see fit. At the end of the day, it’s about creating the best wealth for your children.
Taxation of interest earned on kids’ bank accounts
Please note that there are special rules in place for the taxation of interest earned on kids' bank accounts. Please refer to the Australian Taxation Office (ATO) website for further details.
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