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These accounts allow your child to earn a fixed rate of interest on the funds they deposit, providing the security of consistent, guaranteed returns.
Read on to discover how to find the best term deposit accounts for kids.
The table below features examples of term deposits from Australian banks that allow kids under 18 years of age to apply for an account.
Minimum Age | Minimum investment amount | Interest rate: 12 months | Interest rate: 24 months | Interest rate: 36 months | |
---|---|---|---|---|---|
AMP Term Deposit | 13 | $100,000 | 0.3% p.a. | 0.3% p.a. | 0.3% p.a. |
ME Term Deposit | 18 | $5,000 | 0.65% p.a. | 0.7% p.a. | 0.9% p.a. |
Firstmac Term Deposit | 12 | $5,000 | 0.85% p.a. | 0.3% p.a. | N/A |
A term deposit is a bank account that allows you to earn a high rate of interest on the money you invest. When you open a term deposit, you deposit a sum of money into your account that will earn interest at a fixed rate for a set period – terms typically range from one month to five years. You can access the money in the account (including the initial deposit and the interest you earn) at the end of the term.
A kid’s term deposit is a term deposit account that allows anyone under 18 years of age to open an account. While many term deposits are available only to applicants aged 18 or over, some banks offer accounts eligible to children over 12 years of age or even offer accounts with no minimum age requirements.
What are the benefits of opening a term deposit account for your child?
If you’d like to open a kid’s term deposit for your child, consider the following factors when comparing accounts:
Olivia is 16 years old and has saved a balance of $5,000 that she wants to invest in a term deposit. Although she could invest the money in an online savings account that offers 24/7 access to her money, Olivia wants to remove the temptation to dip into her savings. After comparing kid’s term deposits with a number of banks, Olivia narrows the choice down to two accounts:
Both accounts compound interest annually, so Olivia decides to calculate how much more interest she can earn if she chooses Account B. Using finder.com.au’s term deposit calculator
Olivia finds that she can earn an extra $79.19 in interest simply by choosing the higher interest rate of Account B.
Account A | Account B | |
---|---|---|
Interest rate | 2.50% p.a. | 3.00% p.a. |
Deposit amount | $5,000 | $5,000 |
Investment term | 3 years | 3 years |
Interest earned after 3 years | $384.45 | $463.64 |
Balance after 3 years | $5,384.45 | $5,463.64 |
Earn a fixed interest rate on a wide choice of terms with a Gateway Bank personal term deposit.
Read more…While the stock market continues to fall and recession fears ramp up, we're seeing term deposit rates increase for the first time in years.
Read more…Earn a competitive fixed interest rate on a 3 or 6 month Citibank term deposit when you invest $10,000 or more.
Read more…SPONSORED: It's great to set yourself some fitness, health, travel or career goals, but don't forget about your finances.
Read more…SPONSORED: There are plenty of ways to maximise your term deposit rate and get yourself a better return, even in this low-rate environment. Â
Read more…Business bank Tyro has launched the pilot business term deposit today to existing customers with 30-, 60- or 90-day terms available initially.Â
Read more…If you decide to open a term deposit for a child, remember to consider the following.
Many term deposits don’t charge any fees, but it’s still worth checking to make sure there are no ongoing account-keeping fees to worry about.
If interest rates rise while your child’s funds are locked away in a term deposit, they won’t be able to take advantage of those higher rates until their current deposit matures.
Check the fine print to make sure you and your child know what happens to their money when the term ends. Some banks will simply pay the deposit and interest into another account, while others may roll the funds over into a new term deposit. Instead of automatically accepting this roll over, make sure you compare the term deposits available from other banks to make sure you are getting a competitive interest rate.
Make sure your child is aware that accessing the money in a term deposit is difficult until the deposit reaches maturity. If they want regular access to their money, an online savings account with no access restrictions could be a better choice.
It’s also important to remember that you may have to pay tax on the interest earned from a term deposit, even if the account is held in your child’s name. Check out our guide to the tax implications of opening a kid’s bank account for more information.
Picture: Shutterstock
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My 3 kids have term deposits of $10,000 each. From the age of 12 they are allowed to take the money out to do with as they please. I have saved hard to try and help them get ahead. My ex wants to access their money and with kids able to sign by themselves I can’t stop them when term deposit matures. What 12 year old is mature enough to manage that kind of money. They can’t even legally get a job. Who decided that a 12 year old is mature enough to handle this situation?
Hi Sunshine,
Our company finder.com.au is a financial comparison website and general information service designed to help consumers to make a better decision. Please note we do not represent any company we feature on our pages.
Regarding the current situation it would be nice if you can seek a legal assistance to guide you on this matter.
I hope this information has helped.
Cheers,
Harold