Children’s bank accounts slug unsuspecting savers
NAVIGATING children's bank accounts is certainly not child's play as many enticing deals are littered with confusing terms and conditions.
For children to get the best bang for their buck parents really need to pay close attention to the criteria they must stick to in order to make sure they are getting the maximum returns on their hard-earned cash.
Financial comparison website RateCity analysed all available children's accounts based on weekly deposits of $5 over 13 years - from when a child starts school to graduating after completing year 12.
And the highest returns on savings were $1169 for customers signed up to a Nexus Mutual Junior Saver Account, closely followed by CUA's Youth Saver account.
But RateCity's spokeswoman Sally Tindall said there are "a lot of nasties" to watch out for with children's accounts, which means you can miss out on the maximum rates.
She warns banks are desperate to snare customers at a young age in the hope they will do their banking with them for life.
"Banks realise the potential in children who may end up being lifetime customers,'' Ms Tindall said.
"There's good reason for there to be competition in this space because kids are valuable customers to banks, but that said most accounts are riddled with terms and conditions."
While interest rates on adult accounts are dismal - often around one or two per cent - some children's accounts have interest rates above four per cent.
But be warned - some account interest rates drop once balances reach $5000.
Nexus Mutual chief executive officer Ashley Hood said it is vital children are engaged with their money and having a bank account from a young age is a good place to start.
"The more they understand the importance of money, the more likely they are to make better financial decisions throughout their lifetime,'' she said.
"Kids today rarely see 'real money' exchanged for purchases with our increased use of online banking, cards and digital wallets.
"That makes it hard for them to understand that money isn't an abstract, unlimited resource."
The account offer by Nexus Mutual is only available to ExxonMobil employees, contractors and family, so it's important parents do searches online to see what deals they can access.
Not all accounts are available to everyone.