New research has shown that interest rates on children’s savings accounts have been cut dramatically over recent weeks.
The research, from Moneyfacts, shows that interest rates have been slashed on 115 children’s savings accounts over the past year.
The cuts mean the average rate is now just 1.16%.
The news will come as a huge disappointment to parents who now, more than ever, need to save on behalf of their children. With the cost of university rising and it becoming harder to get onto the housing ladder, financial help from parents and grandparents has never been more important. But lower interest rates will do nothing to help.
Children’s regular saving accounts
The cuts have been particularly marked on children’s regular savings accounts.
This type of account, as the name suggests, is used by parents and grandparents, who don’t have a lump sum to put away, preferring to save a fixed amount each month.
They are also popular as they often pay a relatively high rate of interest. However, the Moneyfacts research shows they have been hit particularly hard.
Halifax, State Bank of India and West Bromwich Building Society have all current interest rates on children’s regular savings accounts.
Interest rate cuts
The cuts on children’s regular savings accounts mirror those elsewhere.
Since the Bank of England cut base rate in August to 0.25%, banks and building societies have reduced rates on savings accounts even further. Furthermore, additional support given to banks by the Bank of England has lessened their reliance on raising money from savers even further, reducing the need to offer attractive interest rates.
The misery for savers looks set to continue with financial experts believing there is little hope of an interest rate rise in the near future.
We are here to help
If you want to put money aside for your children or grandchildren, either on a monthly basis, or as a lump sum, we are here to help.
Call Bev or Sarah on 0115 933 8433 or email email@example.com to chat through your options.