HSBC ups the rate on children’s easy access savings account to 3% making it the top account for kids
PARENTS and grandparents looking to start a nest egg for their children have a new best buy to consider from HSBC.
The bank is upping the interest rate on its MySavings account for children aged seven to 17-years-old from 2.75 per cent to 3 per cent on savings up to £3,000.
This makes it the top-paying easy access account for children open to all, but you’ll have to wait a few weeks to get it as the rate change doesn't start until September 3.
Existing customers will also see their rate go up to 3 per cent from the same date.
Rival bank Santander also pays 3 per cent on its 123 Mini Current Account for children aged 18 and under,but it's only paid on savings from £300 to £2,000.
It pays 1 per cent on savings of £100 to £200 and 2 per cent on savings from £200 to £300.
Top tips for teaching kids to save
MAKE saving fun - try these tips to get your kids started:
- Match your children’s savings on a pound for pound basis
- Get your kids to put some of their pocket money into a piggy bank.
- Then take them to the bank every month to pay it in – get them used to the habit of savings and seeing their balance grow
- Draw a chart on their wall and colour it in as the balance grows to keep them interested and so they can monitor their progress.
HSBC is also increasing the rate on its Future Saver for Children, which is a savings account held by adults on behalf of children, by 0.25 per cent.
This will take the rate from 0.5 per cent to 0.75 per cent but this is not a market-leading account so use a comparison service or check out our round-up of the top children’s savings accounts to find stronger deals.
You can earn more interest if you lock in to a fixed-rate or opt for a monthly savings account like Halifax’s children’s monthly saver, which launched earlier this year, pays 4.5 per cent.
But you will have to pay a penalty fee if you take the cash out before the term ends.
Tracie Pearce, HSBC UK’s head of retail, said: "Giving children financial experience is extremely important for their development, showing them the value of money and helping them get an understanding of budgeting.
"Whether it is money children have received for a birthday or Christmas, through hard work of a paper round or by showing entrepreneurship, the increase in the interest rates on all children’s accounts should make a saving mindset a little more attractive."
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HSBC is also upping rates on a number of other products from September 3.
These include its Help to Buy ISA and its Flexible Saver, but Anna Bowes, from savings advice website, Savings Champion, warned that despite the rate rise these accounts will not top the best buy tables.
"While this is good news for children, it’s a shame that HSBC could not make a more generous increase to other accounts in which savers will have larger balances,” she said.
"Flexible Saver, for example will only be increasing by 0.10 per cent to remain as one of the worst easy access accounts on the high street, paying an appalling 0.15 per cent."
The move by HSBC follows the Bank of England raising its base rate for the first time since November 2017 earlier this month, when it rose by 0.25 per cent to 0.75 per cent.
But while providers have been quick to pass on the increase to mortgage borrowers, they’ve been slow to pass on the 0.25 per cent increase to savings customers.
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