Make sure that your kids aren’t getting a raw deal on their savings
July 1, 2007
There has been much controversy over the past year in relation to interest rates on savings accounts in the UK.
With the Bank of England having raised interest rates four times over the past year by 0.25 percent each time, banks and building societies have been quickly raising interest rates on variable rate borrowing. However, when it comes to raising interest rates on savings many have been far slower to act, and in some cases the interest rate rises have not been passed on in full – in fact, some have not been passed on to savers at all.
According to recent research, although adult savers are getting a raw deal on their savings with some banks, many banks are offering even lower interest rates on children’s savings account, which means that younger savers could be losing out on a lot of money in interest if they have a low interest account. Many children’s savings accounts have interest rates that are a lot lower than the Bank of England’s base rate, which currently stands at 5.5 percent following the recent interest rate hikes.
Research has shown that in some cases savings accounts for children and young adults up to the age of eighteen are paying over 1.5 percent below the Bank of England base rate, with rates of under 4 percent being offered even on balanced that are up to one thousand pounds.
Barclays, the Royal Bank of Scotland, and the Birmingham Midshires Building Society are amongst those that are paying low rates on interest on children’s accounts.
However, experts urge parents and young adult savers to remember that there are some very good savings accounts out there that not only track but also exceed the Bank of England base rate, and that anyone that is receiving a low rate of interest on their savings should look at switching to a more competitive savings account that offers greater benefits and rewards
Alan Wright
1st July 2007
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