Interest rates that are being offered in UK banks for children’s accounts still remain very low and this does not encourage parents or children to save for their future, according to the consumer group Which.
Their survey has shown that children’s savings accounts have interest rates of just 1.1% and may go as low as 0.05%.
The lowest interest rate identified was that of First Trust Bank’s Junior Saver Account. With this result, First Trust has taken action to look into their rates once more and review it for their customers. They intend to review their pricing structure and connect with their customers in the next few weeks.
The organization Which is hoping that more banks will follow suit and do as First Trust bank has done.
According to the survey results, the football club affiliated accounts also have some of the least interest rates offered for children.
Manchester United and Chelsea’s young saving schemes only provide 0.25%. Derby County’s Junior Rams give only 0.1%.
On the other hand, Northern Rock’s Little Rock account offer 3%, which is the highest among all of them.
According to the editor of Which named James Daley, “It’s really important that children are encouraged to save, but it’s a real disincentive when there are such poor rates on offer. We think the situation may get worse unless the government allows transfers from child trust funds [CTFs] to junior ISAs as we foresee that rates for CTFs will decline as providers concentrate their efforts on the new market for junior ISAs.”