Any good bank accounts for children?

[Fionn]

We've never opened an account for our children (both under 4) and when people have given them the odd tenner I've put it towards a toy or clothes or whatever straight away. But a relative has just given me £50 for each of them, and I want to put it away for them. I know I could open an additional account with my bank, First Direct, but wondered if anyone knew of any other accounts. I don't necessarily want to save it for years so don't want a savings account with penalties for early withdrawal. Any ideas?

[bossykate]

Fionn
Are you using your cash isa allowances for the year? if not, i would suggest something like this in your own/dh's name to begin with. you can find "best buys" at www.moneyfacts.co.uk, www.moneysupermarket.co.uk and www.ft.com.
hth.

[Mopsy]

The Nationwide children's savings account 'Smart 2 Save' regularly tops the tables in interest rates, with no penalties. The account is controlled by the parents until the child is 7 I think. Hth

[21stcenturygirl]

Fionn
I've just been comparing rates. Like Mopsy we have accounts for both DDs at the Nationwide which seem to pay very good interest. We also have a Cash ISA which doesn't pay as much interest as the childrens accounts! However, in comparing rates (moneyextra.com) the Halifax's childrens account came up with the best rate.

'm therefore going to set up an account at the Halifax and give my DDs I nice little present courtesy of my low-interest Abbey National ISA!

[Rhiannon]

No but I know a very bad one. Don't touch the Rupert Bear one from Invesco. R

[PamT]

We use HSBC, mainly because all our other accounts are there and the branch is convenient and helpful (more than can be said for our local Halifax branch where you always have to queue for ages and go up 3 awkward curved steps to get in). The children get a 'safe' money box but I don't really know what the interest rate is like. Once they get a reasonable amount in their account I switch some of it to children's bonus bonds with the post office which gives a bonus every 5 years and an additional bonus at 18 (I think). You lose some of the bonuses if you take the money out early but if you are wanting to save for your child's future it does give them a bit more for when they are old enough to marry/go to university etc.

[Rosalind]

I opened Smart 2 save for my youngest and was impressed enough to move one of the other children to it too. It is easy to use and you do not have to switch to it being theirs at 7 unless you want to. They also give away various free gubbins which were in my case tailored to the local area so we did use the free tickets etc.
My only gripe is that letters only give account no and my name so I have to check each time which child's is which.
For my oldest I opened an account with Triodos in Bristol - they are an "ethical" bank so lend on to particular types of projects which I like but is not for everyone. The interest was OK ish but from memory there are also birthday bonuses, although not every year and the account terms may have changed.

[GillW]

We have a "Smart 2 save" account for DS - after looking around it seemed the best combination of good interest rates, and access to the money if necessary - which is used for cash presents, etc. And we regularly put the child benefit into a tracker fund for him with a view to long term investing.

One thing to avoid is the "baby bond" type products which you get so much literature about with the bounty packs, etc - the charges are incredibly high, and more than offset the supposedly tax-free status of them.

I'd recommend the Motley fool book called "Make your Child a Millionaire" and this article is also useful. Some interesting ideas there, like putting it into a stakeholder pension which gets tax relief. Obviously that doesn't give them any accessible savings when they might want them, but in combination with a savings account it could be a good bet.

[debster]

We also have a Smart 2 Save account with Nationwide. It's just like the good old days of saving where you have a deposit book and have to hand money over the counter. Not like the new fangled internet accounts these days! Actually I'm a compete technophile and have a first direct internet bank account and a Smile ISA but still find my ds's savings book a novelty

[GillW]

debster - you can pay into the Smart2Save account by internet transfers from other accounts - just ask ask at your branch for the relevant codes. We do this for DS's account to save us having to go in to the branch and queue every time. Only slight hassle is that we do have to keep a record of everything, and the source of the money, because the Inland Revenue can treat a child's account as yours for tax purposes if the interest per year is above a certain amount and the money in it is provided by you.

[Fionn]

Many thanks for all the suggestions, I'll look into them.