We talk to Mozo's Andrew Duncanson to find out what makes a great value kids savings account and the advice he has for parents to ensure they choose the very best account for their children.
Credit Union SA recently took home a Mozo Experts Choice Award for our Children’s Savings Account. We were pretty chuffed, and caught up with Mozo’s Data Services Director, Andrew Duncanson to discover what makes a great value kids savings account and the advice he has for parents to ensure they choose the very best account for their children.
Here’s what he had to say:
1. Shop around before you settle
You wouldn’t buy the first car you test drove, would you? Then don’t just jump straight for the first kids savings account you see - after all, what you’re really doing is laying the groundwork for your children’s attitude toward saving. So take your time to use comparison sites like Mozo.com.au, read up on different products and see what the experts recommend before making a final decision. That way, you’ll be sure you - and your kids - are getting the best deal.
2. Be sure you can meet bonus interest rate conditions
The best way to boost the interest your kids will earn on their rainy day fund is by choosing an account designed to reward regular savers. These accounts will pay high interest as long as you’re able to meet certain conditions each month. For example, the Credit Union SA Children’s Savings Account pays a bumper 3.25% interest as long as little savers make at least one deposit and no withdrawals in a month.
Those are pretty simple requirements - just make sure you can meet them each month to keep earning generous interest.
3. Check the fine print
Scoring a high interest rate might be at the front of your mind when choosing a savings account for your kids, but there are other things you’ll need to consider - like fees. When we chose our Experts Choice Award winners, we decided that accounts with no monthly fees, unlimited online transactions and no withdrawal notice period offered the best value in the market and those are the kinds of accounts you should be looking for your kids.
4. Gauge your kids’ financial literacy
When choosing an account - especially one with a bonus interest offer - think about what your children already know about money management, and what you’d like to teach them. For example, for younger kids, you might choose an account with simple, easy to meet criteria, like one deposit each month and no withdrawals. For older savers, you might choose one that allows one monthly withdrawal without losing the bonus interest, or requires a minimum deposit amount each month - that way, you can start teaching them about more complex saving and spending strategies.
5. Bank with someone you trust
Lastly, make sure you set your kids up with a financial institution - whether that’s a traditional bank, mutual, or credit union - that you trust. Chances are, they’ll stick with this account at least until it's time to transition to an adult account, and maybe even for most of their lives. So make sure you get them started with someone that you know has their best interests in mind and will continue to offer them great value and support. If you’ve found a great account but you’re not sure what the bank is like, resources like Mozo’s customer review section can be invaluable in working out if they’re a good fit, since you’ll hear straight from the horse’s mouth what it's like to bank there.
Andrew Duncanson is Mozo's Director of Comparison Data Services. His aim is to pass on his knowledge to everyday consumers to help them find a better deal on everything from their banking to energy plans.