What to look for in a savings account for your kids.
Kids are expensive, but a children’s savings account can help defray the cost. These savings accounts are specially designed with low fees, relatively high interest and other advantages that make them worth considering when you’re looking to open an interest-earning bank account for your child.
Children’s bank accounts are designed specifically for teenagers and younger, and are not to be confused with student accounts. Instead, they’re for parents who want to get their kids started on saving early so that by the time they’re 18 they’ll have some savings of their own.
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Some of the special features you can find in many, but not necessarily all, savings accounts for kids include:
- No account-keeping or ongoing fees
- Generous interest rates when you meet requirements. Typically this involves not making many or any withdrawals and making regular deposits
- Maximum age limits
- No linked credit cards or cheque books, or other things that are best kept out of reach of children
- Free and easy deposits
Opening an account for your child is easy. The hard part is deciding which bank to go with. This guide compares accounts from some of Australia’s top banks – St.George, Commonwealth Bank, Bankwest and bcu – and compares the interest rates and fees, and some miscellaneous terms and conditions to be aware of.
Children’s accounts usually have no ongoing fees and offer extremely competitive interest rates by normal standards. However, there are differences from one account to the next so it can be a good idea to see how each account will affect your child’s balance in the long run.
This table shows the interest rates of each account, conditions that apply for those rates, and how much interest will be earnt over 12 months with a $5,000 initial deposit and ensuing $1,000 monthly deposits.
|Product name||Maximum interest rate||Interest earned over 12 months||Conditions that apply|
|Bankwest Children’s Savings Account||2.50% p.a||$264.90*||Account balance is $20,000 or more. Interest rates start at 0.75% p.a. and improve based on account balance.|
|Bankwest Kids Bonus Saver||4.75% p.a.||$505.47*||Child must also hold a linked Bankwest Children's Saving Account in his or her name. Applies each month if no withdrawals are made and deposits total at least $25.|
|bcu Scoot’s Super Saver||3.50% p.a.||$372.22||Deposit at least $20 per month and make no more than $5 in withdrawals within the same month.|
|Commonwealth Bank Youthsaver||2.30% p.a.||$243.53||Maximum rate is paid if you make at least one deposit to the account and have no withdrawals during a calendar month.|
|St.George Incentive Saver||2.30% p.a.||$195.56||Make one deposit each month and no withdrawals to earn bonus variable interest. Interest rates shown are for balances above $100,000.|
*Interest earnt on the Bankwest Children’s Savings Account depends on the total account balance so this number may not be accurate. Similarly, the conditions of the Bankwest Kids Bonus Saver account mean it is not possible to earn this much interest and this number is not accurate.
At first glance, it looks like the Bankwest Kids Bonus Saver account is by far the best choice for earning interest. However, if you look more closely, it becomes clear that this isn’t the full picture.
See what conditions will affect your interest rates for each of the brands below.
There are two very important conditions to note when looking at these Bankwest accounts.
- You need to open a standard Children’s Savings Account before you can open a special Kids Bonus Saver account.
- The maximum initial and monthly deposit for Kids Bonus Saver accounts is $250, and every 12 months the money in this account is moved to the standard Children’s Savings Account, which prevents you from ever earning too much interest.
In fact, the example in the table above isn’t even possible. At 4.75% p.a. interest rates, the most you can possibly earn from interest in a 12-month period is $78.49, with the maximum $250 initial deposit and then another$250 every month after that. Because the amount resets each year it is not possible to ever have more than $3,250 in the Kids Bonus Saver account.
As such, you can probably get a clearer picture of how much you’ll earn in interest by looking at the Children’s Savings Account instead, because this is where the bulk of the money will most likely be kept. However, the interest rates for this account vary depending on account balance.
|Bankwest Children’s Savings Account||Interest rate|
|$0 to $2,999||0.75% p.a.|
|$3,000 to $9,999||1.25% p.a.|
|$10,000 to $19,999|
|$20,000 and over||2.50% p.a.|
In many cases moving money from the Children’s Savings Account to the Kids Bonus Saver account will actually cost you money in lost interest if it bumps the Children’s account into a lower interest rate group. This will always be the case if it means the balance drops below $20,000, and may also be the case for the other thresholds.
- The Kids Bonus Saver account may be a good choice if you know you’ll be able to pay at least $25 into it a month, and ideally as much as $250, and know you won’t need to make any withdrawals from it. The exceptional interest rates depend on these conditions.
- A fully managed Kids Bonus Saver account, utilised to the fullest possible extent, will earn $78.49 in a 12-month period. By contrast, a Children’s Savings Account with $20,000 or more will earn $505.77 in interest per annum.
bcu’s children’s account is called Scoot’s Super Saver, carrying a standard interest rate of 0.75% p.a. and a maximum rate of 3.50% p.a.. The conditions are relatively easy to meet, and all you (or your child) has to do is deposit $20 or more per month, and withdraw $5 or less.
It’s available to children up to the age of 13, at which point open accounts will automatically convert to a bcu Access account. This age limit is lower than with other children’s accounts which naturally limits the total amount of interest you can earn.
The high interest rates and easy requirements make bcu Scoot’s Super Saver a competitive option for children’s savings accounts. The main restriction to be aware of is the 13-year-old age limit, and it’s also important to remember that most money deposited in this account will be largely “locked up” until your child is that age, unless you don’t mind losing out on the bonus interest in some months. Getting the most out of this account therefore means starting early and sticking with it. There is no minimum age limit, and it might not be a bad idea to open this as a savings account when your child is born.
Here is an example of how much this account earns in interest, assuming no withdrawals:
- If you open the account when your child turns 3, make an initial deposit of $100 and then the minimum of $20 every month after that, and maintain it for 10 years until your child reaches the age limit (for $2,900 in total), you will have earned a total of $677.82 in interest.
- If you do everything the same, except this time you make $30 monthly deposits instead (for $4,100 in total), you will have earnt a total of $912.15 in interest.
- If you only deposit the minimum needed to earn bonus interest, by depositing $20 and withdrawing $5 every month, you will earn only $2.92 per year in interest. Taking full advantage of the interest rates usually means depositing more than the minimum.
If you can stick with the program and meet requirements in the long run, bcu Scoot’s Super Saver account can earn an impressive amount of interest. However, beware of variable rates – it’s a long-term plan, but there’s no guarantee your rates will stay so good for the next 10 years.
The Commonwealth Bank Youthsaver account is specially designed for under-18s. As a parent you can only open an account online for children up to the age of 13. Kids aged 14-plus can also open an account for themselves, but will need to visit a branch in person.
Instead of offering more competitive interest rates, the benefits of a Commonwealth Bank children’s account more generally take the form of reduced fees, and other benefits that are difficult to put a price tag on.
- Earn bonus interest of 2.30% p.a. in any month where you have made at least one deposit and no withdrawals.
- Interest is calculated daily and paid quarterly.
- There are no specific minimums or maximum requirements for account balances or deposits, so Youthsaver may be a suitable choice for parents with unpredictable finances.
- The upside of a less competitive interest rate is that it’s not quite as important to make sure you’re getting it each month. If you need to sacrifice your bonus interest to make a withdrawal it carries less of a cost.
- If you open a Youthsaver account for a child aged 10, with a $100 deposit, and then deposit $20 a month for the next 6 years, by the time your child is 16 they’ll have an account with more than $2,800 in it, including $321.38 in interest.
St.George recommends the Incentive Saver account for children, but does not currently offer a more tailored option. This is a savings account that is available to both children and adults, and consequently has less competitive rates but additional benefits that might make up for it.
- With a maximum interest rate of the St.George Incentive Saver account earns less interest than the other options on this page.
- To earn the bonus interest, you need to make at least one deposit a month and no withdrawals. These deposits can be as much or as little as you want, making it easy to keep earning bonus interest.
- There are no minimum balance requirements and no monthly account fees. You can use this account to save up for specific things, empty it when it’s time to spend, and then start again.
- With an initial deposit of $1,000, and then another $100 every month for a year, you will earn $28.09 in interest over the course of a year. Doing the same for two years will earn you over $80 in interest, and doing the same for three years will earn you $155.87 in interest over that period.
- This is not a children’s bank account, it is a savings account for adults and children alike. Because of this, you may be able to maintain this account for longer than others and earn more interest in the very long run. Parents might consider opening this account for themselves if it’s tempting, and then selecting a different option for their child’s bank account.
- You can make free transfers into this account, and it might be a good option for those who plan on making frequent deposits of varying sizes.
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Savings accounts for kids typically have fewer fees and costs than other types of accounts, but some may still apply. If you’re not careful, you might end up losing a significant amount to fees in the long run, as well as more in lost interest.
Fees are a cost to be considered alongside others. It can be a good idea to divide fees into the avoidable and the unavoidable to see the actual costs, and then to devise a plan to let you skip fees where possible.
- Monthly account keeping fees, and withdrawal and deposit fees are the “unavoidables” because these transactions will always be carried out with every account.
- ATM fees are avoidable, but are also important to consider if your child will be using their account.
|Account||Monthly account fee||Withdrawal and deposit fees||ATM fees|
|Bankwest Children’s Savings Account||$0||None||No fees for Bankwest and Commonwealth ATMs, fees apply to others|
|Bankwest Kids Bonus Saver||$0||None||No fees for Bankwest and Commonwealth ATMs, fees apply to others|
|bcu Scoot’s Super Saver||$0||6 free staff-assisted transactions, unlimited free online and phone banking||4 free bcu ATM withdrawals, fees apply after this, and for other brand ATMs|
|Commonwealth Bank Youthsaver||$0||None||$2.00 for overseas and other-brand ATMs|
|St.George Incentive Saver||$0||1 free withdrawal per month, fees apply to other transactions||$0.60 for St.George, BankSA, Bank of Melbourne and Westpac ATMs, owner fees for others|
It’s important to have a plan for how you will be using the account, as this will affect the fees you may incur. For example, if you know you’ll be making frequent deposits and withdrawals you might want to specifically look for a provider that allows for unlimited fee-free transactions, or if fees apply only to phone banking but not to online banking then you might want to plan on conducting all transactions over the Internet.
See a breakdown of the unavoidable and avoidable fees for these accounts below.
Neither the Bankwest Children’s Savings or Kids Bonus Saver accounts have unavoidable fees, in that if you just let it sit and accumulate money while making deposits in Australian dollars only, there is no cost. However, if you start making other transactions, including foreign currency deposits, costs will apply.
With Bankwest, you can keep children’s banking fees non-existent as long as you avoid international transactions and opt to do the bulk of your banking online.
As with its interest rates, you may be able to get exceptional value from Bankwest children’s accounts, but it can be largely dependent on making sure you carefully manage the account to maximise value.
- You can perform essential account management at no cost. This includes online account enquiries, transferring funds out from the account to other Bankwest accounts, and making deposits in Australian dollars.
- No fees apply to Commonwealth and Bankwest ATM transactions. Varying owner fees will apply to others.
- Bankwest charges nominal fees for telephone enquiries to its help centre, although you get two free help centre calls a month per account. No fees apply for phone banking transfers between Bankwest accounts.
- You can get physical bank statements mailed to you for free, but in certain circumstances, such as if it’s sent to an overseas address, fees will apply. It might be a good idea to opt out of physical statements entirely and do all your banking online.
bcu’s fees are a bit different to the other providers in that account holders are able to perform a limited number of staff-assisted transactions for free, but costs will start applying after the limit is reached. Fortunately you still get free unlimited online and phone banking transactions, so this is a completely avoidable expense.
bcu’s limited number of free staff-assisted transactions can be useful for those rare situations where speaking to a real person is simply the easiest way to solve a problem, but it’s still a good idea to plan your banking around going online in order to keep costs down. If phone banking is your preferred way of doing things, bcu might be a good choice because unlike many other providers it doesn’t charge fees for it.
- You can get up to 4 free withdrawals and 2 free balance enquiries at bcu ATMs, but fees apply after this and for other brand ATMs.
- Fees apply to most staff-assisted transactions.
- Fees apply to international currency transactions.
- You can receive physical statements for free, but a $6 fee per page applies if you request previously sent statements. You can find your previous statements free of charge online at any time.
- You can avoid fees by sticking to online and telephone banking.
As with the other options, you can completely, or near-completely, avoid fees with the Commonwealth Bank Youthsaver account, especially if you favour online banking.
However, unlike the other options, the Youthsaver account is designed to allow for more independence on the part of account holder, and can be used more like an everyday account for kids than a dedicated savings account. In fact, kids 14 years and older need to open this account for themselves, and parents can’t do it for them.
While it may not offer as competitive interest rates as the other providers, the Youthsaver account allows for a variety of useful fee-free transactions online, which can make it a suitable option for those who want an account that earns reasonable interest, but can also be used more like a regular bank account than a dedicated savings vehicle.
You might think of this as a “normal” bank account that’s only available for under 18s, and comes with few fees and competitive interest rates. Emancipated minors, people aged 14 to 18 who want their own account, and parents who want to open a functional, active account for children 13 years and under may want to consider a Commonwealth Bank Youthsaver account.
- There are no monthly account fees, and no general withdrawal or deposit fees, even for assisted transactions. If you like to take advantage of face-to-face customer service in banks, the Commonwealth Youthsaver account might be a good way of doing so at no cost.
- Fee-free electronic transactions include transfers to linked accounts, BPAY payments (except over the phone), scheduled payments and third-party payments (except when using a transfer group). Fees may apply for other services.
- Other than losing your bonus interest for the period, there are no withdrawal fees.
- There are no fees for using Bankwest or Commonwealth Bank ATMs in Australia to make withdrawals or balance enquiries.
- Fees apply for all foreign currency conversions
The St.George Incentive Saver account also has fees that are entirely or almost-entirely avoidable depending on how you plan on using the account.
With this account, it may be advisable to set up deposits as regular, periodic payments instead of doing them manually each time, as this method can get you potentially unlimited transfers at no cost, while fees may apply to individual deposits.
As such, this account may be well-suited to people who want a separate savings account for themselves or their children, and have long-terms plans for it that involve regular deposits and few withdrawals.
- There are no monthly account keeping fees.
- You are limited to one free withdrawal per month, and one free staff-assisted transaction per month.
- There are no fees for electronic or phone banking transactions with this account at all, either before or after the one free transaction per month, but they will still use up your one free transaction. As such, if you need to make a staff-assisted transaction you can avoid fees by doing it early in the month, before anything else.
- The Incentive Saver account lets you set up free periodical payments between St.George, BankSA and Bank of Melbourne accounts, but fees with apply for other providers.
- Fees apply for all ATM withdrawals, Bank at Post and EFTPOS transactions, but do not apply to Visa debit card transactions. If you’ll be using your Incentive Saver account more like an everyday account it can be worth planning accordingly.
Before deciding on any one children’s savings account, you should also take a look at the miscellaneous conditions that apply, as well as the interest rates and fees. Consider using this as a checklist of what to look for in the terms and conditions of a children’s savings account.
- Age limits: What are the age limits?
- Account transfer: What happens to the account when the age limit is reached?
- Signatory requirements: Who is required to legally sign their name to the account and get access?
- Transaction access: When can and can’t parents or their kids make transactions?
- Special eligibility requirements: Are there any unusual eligibility requirements?
|Age limits||Under 15||Under 13||Under 18||None|
|What happens to the account at the age limit||Bankwest contacts you to discuss options||Converts to a bcu Access account||Commonwealth Bank contacts you and transfers your account||-|
|Signatory requirements||Parent, guardian or other adult with verified identity||Parents or guardians||Parents only if the child is under 14, children only if they are aged 14 to 18||-|
|Who can make transactions?||Signatory only. Children cannot make withdrawals||Parents and children||Parents only, and children with parental consent until age 14. Shared access from ages 14–16. Children can request exclusive access without parental permission at age 16||Account signatories|
|Special eligibility requirements||Must hold a Children’s Savings Account to open a Kids Bonus Saver account||Must have a bcu sub account. This can be opened for free||n/a||n/a|
The Bankwest children’s accounts are largely designed to prevent the kids from accessing and spending the money, keeping control firmly in the hands of the parents until the child is 15.
With a relatively low age limit of 13, you have a limited amount of time to take advantage of the benefits offered by bcu Scoot’s Super Saver. You don’t actually have to be a parent, or even a legal guardian to open an account on behalf of a child, which can make it a good option for unconventional families or in unusual situations. Both parents and children can make withdrawals from this account.
The Youthsaver account is different in that parents can only open it for kids under the age of 14, after which the child has to open it in person. If you want to open an account online, it must be done before this age cut-off. At the age of 16 children can request full access to the account and restrict parental access, even without parental approval. Emancipated minors, children who want more control over their finances or parents who want to promote more independent financial management in their children may see this as a significant advantage.
The St.George Incentive Saver account is not a children’s bank account. Instead, it is simply the account recommended by St.George as a similar option to children’s accounts, and as such it carries no age limits or special signatory requirements. This means it can be very flexibly tailored to suit your needs. As a parent you can open an account as the signatory and then grant access or close the account when the time is right.
In all cases, even where no additional eligibility requirements apply, there will be some conditions that have to be met, such as needing to have an Australian address and providing identification.
Most of these banks provides educational games, community programs, online fun-spots and other ways for kids to learn about finances. This is worth considering because it can help your child understand some of the more important concepts in finance from a young age, and can help bring it all to life in a way they can understand. Conversely, some parents may deliberately look to avoid bank educational programs that they feel are too intrusive.
When it comes to children’s banking, Bankwest is all business. Bankwest children’s accounts are only accessible by the parents, and the institution doesn’t feel the need to speak directly to kids with fun or games. Some parents may appreciate a bank that takes this approach while others may prefer to look elsewhere.
In contrast, bcu has many games, freebies and other ways of getting kids engaged with banking. In particular, bcu takes an interest in education, and offers financial safety tips, an “ask Scoot a question” section, and a range of kid-friendly deals on icecream, surfing lessons and other activities. In particular, bcu also offers a section for helping kids make their own savings plans that ties in directly with their account. You can explore bcu’s kids zone here to see what it offers.
bcu’s programs for kids might appeal to parents who want their children to start exploring the world of finance, but who also want to be able to look over their children’s shoulders as they do so.
- Kids can earn stickers when depositing money into a Scoot’s Super Saver account while at a branch, and can get a sticker book to fill up. No minimum deposit is required.
- If your child has a question about how money works, you can encourage learning by asking Scoot a question with your child.
Commonwealth Bank is known for being very active in schools and communities, with programs like Dollarmites and the CommBank School Banking Program. This involves participating schools around Australia letting kids make deposits into their Youthsaver accounts, and giving Dollarmites tokens as a reward. These tokens can then be redeemed for prizes which change every year. Participating schools receive commission for Commonwealth accounts opened under the program and deposits made at school.
For this reason, Commonwealth Bank may be a good choice for parents who want their children to get a better understanding of finance from a young age, outside of the house and in the safety of a supervised school environment. Parents who want to educate their children about money, but aren’t sure where to begin, may appreciate the wide range of teaching materials on offer.
- The Beanstalk. Commbank’s curated selection of educational videos and content, suitable for both parents and children. Semi-animated videos and teaching tips for parents can make it easier to answer your child’s questions, and even learn with them.
- StartSmart. Commonwealth Bank’s national program of workshops, online resources, teachers and interactive programs that already reaches over 500,000 students, making it the largest program of its kind in the world. StartSmart isn’t just for kids, and also includes content for young adults to fill in their knowledge gaps.
St.George Bank’s educational resources are largely focused on the parents instead of the children, and their old kids’ program, the Happy Dragon Club, has been discontinued.
Parents who want to take a direct hand in their children’s money education may appreciate the St.George approach which prioritises useful and practical material over kids’ corners and fun activities. Note that unlike the other providers mentioned on this page, you don’t have to have an account with St.George to take advantage of these materials. You can simply go to their website and take full advantage whether you are a member or not.