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Family Physician
Family Physician, Internet Researcher
Category: General
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Experience:  Researching answers to questions online for 20+ years.
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hi I have bank young saver bank accounts for each of my 7 grandchildren

Customer Question

hi I have bank young saver bank accounts for each of my 7 grandchildren but the interest they receive is hardly worth having can you advise me which bank is likely to offer the best rate please
Submitted: 4 years ago.
Category: General
Expert:  Family Physician replied 4 years ago.

Unfortunately, interest rates on back deposits has dropped dramatically over the last few years - since the financial crisis. Central banks throughout the world lowered interest rates in an effort to stimulate the economy. Banks earn money by lending out deposits at rates higher than the rates they pay for deposits. Since the interest rates on loans is so low, the amount that banks pay to savers is also exceptionally low. In your case they are paying about 0.12%

A junior-ISA may be one option if you prefer a more traditional bank deposit. Barclays site shows interest rates much higher than the rate you are currently receiving on these deposits. There are some restrictions on these tax-free accounts - which you would have to discuss with your advisor or bank.
http://www.barclays.co.uk/Savings/Childrenssavings/H1242557860616/

You may want to discuss other options with a professional investment advisor. Depending on the age of your grandchildren, and the length of time that you expect to invest the money before it would be used, investing in stocks or mutual funds may be a better approach. In the long-term, stocks do tend to outperform savings accounts.