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Kids’ savings accounts put to the test – how they stack up
RateCity.com.au has put over 50 kids’ savings accounts to the test to compare how they perform over time.
The rates available to young savers start at low as 0.10 per cent and climb as high as 3.50 per cent.
However, our analysis found the higher interest rates didn’t always deliver the biggest returns once all the fine print was factored in.
Common traps catching young savers out:
- Caps on overall balance.
- Penalties if you withdraw money.
- Minimum monthly deposits.
- Age limits.
How we put kids’ savings accounts to the test
RateCity.com.au put kids’ savers to the test by calculating how much interest you’d earn if you opened an account for a child on their first birthday and deposited $20 a week until the day before their 13th birthday.
Once we factored in all the fine print, the account with the highest interest rate of 3.50 per cent earned barely any interest, because it was only available for kids aged 8 and over and on balances of $1,000 or less.
Australian Unity had the third highest interest rate of 2 per cent but earned the most interest – a total of $1,630. In this scenario the child would have a grand total of $14,150 in savings by their 13th birthday.
By contrast, CBA’s popular YouthSaver account earned just $344 interest over this time, with a total of $12,864 in saved in the bank.
The highest earning kids’ savings accounts
$20/week from age 1-12 (inclusive) (Note: sorted by biggest return)
| Bank | Account | Max rate | Interest earned over 12yrs | Cap for max rate | Age (inclusive) | Ts & Cs |
| Australian Unity | Kids Saver | 2.00% | $1,630 | $20,000 | 0-14 | Deposit $5+/mth and no withdrawals for max rate. |
| Great Southern Bank | Youth eSaver | 2.40% | $1,495 | $5,000 | 0-17 | Balances over $5,000 earn 1%. |
| Police Bank / Bank of Heritage Isle | Dynamo | 1.70% | $1,369 | $50,000 | 0-12 | Deposit $20+/mth and no withdrawals for max rate. Rate is 0.40% if conditions not met for mth. |
| CBA | YouthSaver | 0.45% | $344 | $50,000 | 0-17 | Grow the balance each month. |
Source: RateCity.com.au. See full list below.
RateCity.com.au research director, Sally Tindall, said: “Opening a savings account for your child is a fantastic way to teach them about money and help set them up for the future.”
“Be warned though, picking the right savings account is not child’s play. Most are full of tricky terms and conditions buried in the fine print,” she said.
“Our research found the kids’ savings accounts with the highest interest rates didn’t necessarily offer the biggest returns, especially over time.
“Many of these kids’ accounts are littered with fiddly terms and conditions that can put a dent in how much interest your child can earn.
“When selecting a kids’ account, read the fine print carefully and make sure you can meet the conditions for the maximum interest rate before signing up.
“Currently savings rates are at record lows, but with the RBA widely tipped to start hiking as early as June, the future is looking a little more hopeful for savers.
“When the cash rate does finally rise, customers should keep an eye on how much their bank passes on. If it’s less than other banks, it could be time to start shopping around,” she said.
Tips to help you find the right savings account for your child
- Plan how much will you deposit and withdraw: Start by thinking about how much you or your child are likely to deposit each month. Consider if you might need to make any withdrawals.
- Compare the top kids’ savings rates: Use a comparison site to look at what’s on offer.
- Read the fine print: Will your child be able to meet the terms and conditions? If not, try another account.
- Watch for the rate caps: Be aware that some accounts only pay the max interest rate up to a certain amount (for example $1K/$5K).
- Check if the app and website is easy to use: Read reviews online to help you know if the app/online banking is kid friendly.
- Stay vigilant: Review your saving account every 6 months to make sure you’re getting a good rate.
FULL RATECITY RESEARCH – HOW DO THE KIDS’ ACCOUNTS STACK UP
(Note: ordered on biggest return to smallest)
| Bank | Name | Max rate | Interest earned over 12yrs | Cap for max rate | Rate after cap | Age inclusive | Ts & Cs |
| Australian Unity | Kids Saver | 2.00% | $1,630 | $20,000 | 1.00% | 0 - 14 | Deposit $5+/mth and no withdrawals for max rate. |
| Great Southern Bank | Youth eSaver | 2.40% | $1,495 | $5,000 | 1.00% | 0 - 17 | N/A |
| Police Bank / Bank of Heritage Isle | Dynamo | 1.70% | $1,369 | $50,000 | 0.00% | 0 - 12 | Deposit $20+/mth and no withdrawals for max rate. Rate is 0.40% if conditions not met for mth. |
| Gateway | Kids Dollaroo Savings | 1.50% | $1,140 | N/A | N/A | 0 - 15 | Interest paid bi-annually |
| Transport Mutual Kids Saver | Kids saver high interest account | 1.50% | $1,115 | $10,000 | 0.02% | 0 - 16 | Interest paid quarterly |
| The Capricornian | Youth eSaver | 1.50% | $1,036 | $5,000 | 1.00% | 0 - 15 | N/A |
| IMB | Zoo account | 1.30% | $1,030 | $50,000 | 0.10% | 0 - 12 | Deposit $10/mth and no withdrawals for max rate. Base rate is 0.10%. |
| Auswide | Ziggy | 1.26% | $996 | None | N/A | 0 - 15 | 1+ deposits /mth and no withdrawals for max rate. 0.01% if conditions not met. |
| Credit Union SA | Childrens Savings Account | 1.10% | $864 | None | N/A | 0 - 17 | 1+ deposits /mth and no withdrawals for max rate. Base rate is 0.05% |
| Geelong Bank | Young Achievers | 1.10% | $864 | None | N/A | 0 - 17 | Make at least 1 deposit /mth and no withdrawals for max rate. Base rate is 0.40% |
| People's Choice | Young Savers | 1.00% | $783 | None | N/A | 0 - 17 | Deposit $5/mth and no withdrawals for max rate. Base rate is 0.10% |
| Police Credit Union | Beans Savings Account | 1.00% | $783 | None | N/A | 0 - 17 | Deposit $10/mth and no withdrawals for max rate. Base rate is 0.20% |
| Greater Bank | Life Saver | 1.00% | $783 | None | N/A | 0 - 24 | Balance must be higher at end of mth to get interest. |
| First Choice | Junior Saver | 1.00% | $783 | None | N/A | N/A | |
| NICU | Super Saver | 1.09% | $780 | $25,000 | 0% | 0 - 12 | Interest paid annually |
| Illawarra Credit Union | Wildlife Saver | 1.70% | $775 | $3,000 | 0.50% | 0 - 17 | At least $10/mth and no withdrawals for max rate. No interest <$25K or if conditions not met |
| Coastline | Cubs | 1.00% | $747 | $10,000 | 0.25% up to $20K then 0.10% | 0 - 11 | Transfer to Kickstart account at 12 with same rates. |
| Australian Mutual | Young Saver Account | 1.00% | $573 | $5,000 | 0.25% up to $10K then 0.01% | 0 - 17 | N/A |
| P&N | Way Cool | 1.10% | $531 | $5,000 | 0.00% | 0 - 15 | N/A |
| LCU | Young and Free Student Account | 3.50% | N/A | $1,000 | 0.01% | Aug-25 | N/A |
| Australia's biggest bank | |||||||
| CBA | YouthSaver | 0.45% | $344 | $50,000 | 0.05% | 0 - 17 | Increase balance each month for max rate otherwise base rate of 0.05% applies. |
| Source: RateCity.com.au. Notes: based on a parent setting up an account on the child’s first birthday and adding $20/week on a Monday until the day before their 13th birthday. Rates are accurate as of 18/04/22. | |||||||
Disclaimer
This article is over two years old, last updated on April 18, 2022. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent savings accounts articles.
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