Bank accounts for kids - recommendations...

Lynton

Lynton

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OK looking at setting up a bank account for the twins....

A Myriad of options, but essentially looking at a "normal" bank account, we can put birthday money into etc etc initially (we will no doubt set them up with regular deposit accounts or junior ISA's as and when)... just initially want something simple.

Went to the Halifax today who are offering 3%. However the woman was a bit wishy washy and kept pointing to headline figures of 6% on the regular savings account - so I felt the need to "point out" :nono: that in the example of £50 a month, totalling £600 deposit and interest earned is £18 and some pence, we are looking at 3.1% or so... to which she replied "well if you can do maths it's easy to work out..." (maybe an email later tonight)

I am tempted by Virgin at 2% because on a £1000 investment over a year or so, the difference is £10 (assuming calculated the same way) and for that £10 which I would put into their accounts, that means Daddy (and Mummy) have access to the virgin lounge, so free tea, coffee, biscuits, internet, wifi, etc and discounts on things....

Their interest is paid annually on 1st July, so if I were to put £500 into each on 30th June would we get 2% on that or do they pay on 1st July or calculate it daily / monthly and pay yearly?

Also as said do not want a regular standing order transfer but for the sake or argument assume £50 paid into each account monthly (pocket money, Daddy's 20p's etc etc)

On £600 over the year, what would be the difference on a daily monthly and annual calculation, given compound interest would apply to the first 2. Say on 2% and 3%?

I fully admit, whilst a clever bunny, I am not a finance guru, though I expect

a) Several on here are
b) Probably not many £ in it over a year...


Help most appreciated.

Also tried many others and ranged from 0.25% to 0.7%.



Thanks
 
What about buying gold - until they're old enough to need to access the cash? From my experience with my kids all the banks are much of a muchness (i.e. crap) until they get to student sort of age.
 
Spuff said:
What about buying gold - until they're old enough to need to access the cash? From my experience with my kids all the banks are much of a muchness (i.e. crap) until they get to student sort of age.
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Because £500 of gold could be worth £200 in a years time. (And yes it could be worth £800) Unless the bank goes under my £600 will be a minimum of £600. Primarily it's to teach them in a few years, how money works and bank of daddy is not a cash machine!) I could look at gilts, bonds, futures, gamble the mortgage on an emerging market or buy premium bonds... maybe buy lottery tickets...

Unless you have something reasonably constructive to add to the original post, please shut up...:thumbs:
 
Lynton said:
On £600 over the year, what would be the difference on a daily monthly and annual calculation, given compound interest would apply to the first 2. Say on 2% and 3%?
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I'm not a financial person but I passed O level maths and the principles behind the calculations come from what was taught at O level (and presumably therefore at GCSE nowadays).

So, first question is, does anyone still do an annual interest calculation? What figure do they use to calculate the balance from which the interest is worked out - balance at 1st January, at 31st December, some other date, some average? If it was balance at 1st Jan you could take it all out on 2nd Jan apart from £1 to keep the account open and save it somewhere else for 364 days, then move it back on 31st December for a couple of days. So I presume no-one does that. I have regular saver accounts and they are all daily.

On a monthly vs daily interest calculation the difference will be small and largely dependent on when in each month the regular deposit was made, although again it would depend on how the monthly balance is determined for the purposes of interest calculation. Basically not enough to worry about unless the calculation is done on the last day of the month then you make a deposit on the first of the next month, so the sum deposited does not earn interest for 30 days. Even then it is pennies. Over the course of a year depositing £50/month starting from £0 and ending with £600 (+interest), on a daily interest account, the day of the month that the deposit was made would make a maximum difference of 50 pence, for first of the month vs last day of the month.

That's as certain as I can be without knowing how the bank works out the balance on which it calculates interest every month. If there's a banking person here maybe they will know, but I can't see why any organisation would not calculate interest daily, even if they only updated the balance once a month.

edit - On review I may have got my maths calculating the difference between start of the month and end of the month wrong. It might be as much as a pound. However, I want to go and do something else so I'm not getting the logarithm tables out again :p
 
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Yes Mark - your first Q is the first Q i am trying to determine!

As I said, I think it is going to be pennies...

Pretty sure all are calc daily but applied monthly or annually...

however 2% / 365 or 3% over 365 not much difference really....
 
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Lynton, have you looked at Childrens bonds? available in £25 blocks currently giving 2.5% AER tax free.
From when we started with bonds till she had to cash them in at 21, she got back over double what we had put in
 
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We have a Santander account for our 2 yr old due to them having free coinstar machines so that we can put the change jar into his account. The plan is to move the money elsewhere although we haven't done that yet.
 
Lynton said:
Unless you have something reasonably constructive to add to the original post, please shut up...:thumbs:
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Ah - my mistake. When you started this thread here "How did people cope before the internet", I thought your simple bank account/interest post was being ironic!

If you weren't, then the only "reasonably constructive" thing I'd like to add is that when you get to the stage when your kids need to be taught social skills, seek external help. :thumbs:
 
For the time being, play Monopoly with their money - be a whore! Go for whatever account gives the best interest for whatever the high rate term might be then move it if there's a better deal elsewhere. While inflation is higher than the interest rate, savings effectively cost money - while it's true that £100 will be £100 in a year's time, that £100 won't buy as much this time next year as it does today, even if it's attracted a year's interest at today's rate. Until the twins are of an age where they can spend their own money wisely, it doesn't really matter if their money's tied up for a period of time, so don't be put off by accounts that can't be quickly accessed.
 
do you still have to apply to not pay tax on interest on a child bank account ?
 
Lynton said:
Because £500 of gold could be worth £200 in a years time. (And yes it could be worth £800) Unless the bank goes under my £600 will be a minimum of £600. Primarily it's to teach them in a few years, how money works and bank of daddy is not a cash machine!) I could look at gilts, bonds, futures, gamble the mortgage on an emerging market or buy premium bonds... maybe buy lottery tickets...

:
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Actually premium bonds aren't a bad idea - they don't disappear, you can sell them and recover your original investment, and in the next 18 years theres a reasonable chance of them winning more than you'd get in interest from the bank.

If you definitely just want a cash bank account - as has been said any mainstream bank will be fine - several of my friends with kids use Lloyds without any fuss

Probably the best thing is just to pick the bank and branch that you use - so that they can 'go to the bank with daddy' rather than you having to make a special trip somewhere else
 
Poah the answer to your question is yes.
 
Spuff said:
Ah - my mistake. When you started this thread here "How did people cope before the internet", I thought your simple bank account/interest post was being ironic!

If you weren't, then the only "reasonably constructive" thing I'd like to add is that when you get to the stage when your kids need to be taught social skills, seek external help. :thumbs:
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Thanks! However I do have great social skills myself, I am just have an allergic reaction to muppetry.. :lol:
 
Lynton said:
Thanks! However I do have great social skills myself, I am just have an allergic reaction to muppetry.. :lol:
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Perhaps I should have said communication skills. ;)

Sounds like an autoimmune disease.
 
Spuff said:
Perhaps I should have said communication skills. ;)

Sounds like an autoimmune disease.
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Yep have those too Paul.. just what is your frigging point? If you don't have one relevant to my original question, please move along.

Thankyou!
 
play nice please folks...
 
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