Teaching a child about the values and rewards of saving for a rainy day can play a massive part in forming skills and attitudes towards finance later in life.
Investing in a child's future whilst they are still very young can help provide youngsters with a solid financial platform with which to enter their teens and adulthood.
An account with a competitive interest rate should always take precedence over gimmicky freebies and incentives, as these tend to be the lower paying deals. Of course, you can always open an account with these freebies with a minimal amount and invest the majority of money in the better paying deal!
A range of accounts designed specifically for young savers offer competitive variable or fixed rates in return for varying deposit amounts.
Launched over eighteen months ago to replace the Child Trust Fund, Junior ISAs offer a tax-free alternative to saving. Adults can invest up to £3,720 on behalf of a child, per tax year until the child reaches 18.
Children are eligible for a Junior ISA if they were born on or after 3 January 2011 or before September 2002.
Coventry Building Society currently pays the top junior tax-free variable rate with its Junior Cash ISA at 3.25% in return for deposits of just £1 and over.
Investing in a fixed-rate bond or a regular saver account can teach youngsters the importance of leaving money untouched over a specific term, whilst it gathers interest.
The Halifax Kid's Regular Saver account pays a great rate of 6.00% in return for regular investments between £10 and £100, whilst the Children's Bond Issue 35 from National Savings & Investments pays a competitive fixed rate of 2.50% over a five year period.
If your child is old enough to understand the basic principles of money and saving, take them with you to choose their account. Doing so will allow them to compare accounts, chat with bank staff about the best deals and help them decide how much of their pocket money they want to put aside in an account.
Showing your child how to monitor their interest on a regular basis is also a great way to encourage a diligent and responsible attitude to saving.
Compare Junior ISA best buys Compare children's savings accounts (high street) Read more about tax and children's savings
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.