We are constantly looking at the best interest rates for savings accounts, and tracking the highs and lows of the market.
When we share the best savings accounts we normally filter the results so that we can find the products with the fewest restrictions. For example, some savings account deals are only available for existing customers, people who have specific jobs or who live in certain areas.
The latter is interesting as we’ve seen providers are offering exclusive deals for people that live in its local area. Banks have also been pitching local deals specifically for young people, but how do these compare with the UK-wide interest rates?
Here, we look at three different types of savings accounts for young people and compare the local deals with those that are available to everyone.
First up are regular savings accounts, which are great for people who would like to save little and often. Bath Building Society is keen to support young people in its local community and help them to develop a savings habit, so it’s offering a regular saver for anyone aged between 16 and 25.
If you fit this age demographic you also need to live, work or study in Bath and then you’ll be eligible for the savings account. Similar to other regular savers there is a cap on how much you can save, as you can only save between £10 and £50 each month. The good news is that this savings account has an attractive interest rate at 6.75%.
The best interest rate for a regular saver aimed at young people across the UK is Halifax’s monthly saver for children under 15. This account works slightly differently to Bath Building Society’s offering, as this is aimed at adults who would like to put money away for their child each month. The interest rate is 5.5% fixed for 12 months and you can save between £10 and £100 each month, but you don’t have to pay in every month.
If you are looking for a tax-free savings account, then a junior ISA is worth exploring. Bear in mind the allowance is slightly different compared to an adult ISA, as you can only add up to £9,000 each year. Bath Building Society is currently offering a junior cash ISA with an interest rate of 5% and you can vary the amount you save, but this does come with some area restrictions. This account is restricted to children who live, work or study in Bath but it is also open to parents, grandparents or legal guardians who have been a Bath Building Society customer for at least the past 12 months.
If you don’t meet this criteria, then the next best interest rate for a junior cash ISA comes from Coventry Building Society at 4.15%. You can apply for this cash ISA via post, phone or by popping into a branch - so although there are no area restrictions, if you want to open the account in person it’ll suit those living in Coventry. This account also does not allow access until your child turns 18, so it’s best for a long-term saving goal.
If you would prefer to access the money when it suits you or your child, then an instant access account could be the answer. Swansea Building Society has an instant access account that’s been specifically designed for customers aged 18 and under or for a parent or legal guardian who wishes to open an account on behalf of a child. This savings account is called a Young Saver and it’s only available for children that live in Wales. If you fit this criteria, then you can take advantage of a competitive 4.04% interest rate.
Alternatively, HSBC is hot on its heels with an instant access account that offers a 4% interest rate. HSBC MySavings is open to anyone aged between seven and 17 and its aim is to teach young people how to handle money wisely. From the age of 11, your child will be able to access online and mobile banking and they’ll receive a debit card so they can withdraw and spend money in shops. The account can be set up with as little as £10, which is a great way to start saving some pocket money.
By reviewing the savings accounts with area restrictions it’s clear that there are some great deals if you or your child fit the criteria, so it’s always worth researching what your local providers are offering. However, there are also plenty of great products with competitive interest rates available to all young people across the UK.
As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.