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Nationwide overhauls basic children’s savings accounts

27. Oct, 2011 Categories: Business Bank Account Updates, News by Business Bank Account 0 Comments

One personal and business bank account provider has recently overhauled its basic children’s savings accounts to attract more business, it was recently reported.

Nationwide’s new fixed rate bond, which carries a 3.15 per cent interest rate before tax, runs for 14 months and can be opened by either a parent or a child over the age of seven.  However, its new easy access account only pays a rate of 0.75 per cent, well under the best buys from providers such as Northern Rock, which pay as much as 3 per cent on its children’s account.

Other financial service providers offering more than the Nationwide deal include Halifax with it’s Young Saver, the Ready Steady Save account from Chelsea, and C&G’s young saver, which all offer a 2 per cent return.  Meanwhile, Halifax also has a top 6 per cent deal marketed towards parents who wish to put away anywhere from £10 to as much as £100 on a monthly basis, with a total of £1,239 built up at the end of a 12 month period inclusive of interest before tax if savers choose to deposit a full £100 every month.

Industry experts remind parents to ensure that pre-tax interest is paid for their non-tax-paying children by filling in form R85.  The personal tax allowance for children is £7,475, with the limitation of only being able to earn £100 in interest before taxes on a yearly basis from cash provided by each parent in taxable savers, and once the interest earned exceeds this £100 cap, the entire amount is taxable at the highest rate of tax applicable to the parent.

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Tags: Business Bank Account Updates, fixed-rate bond, interest rates, savings accounts