High Interest Savings Accounts for Kids

So Bankwest offers the headline rate of 10% interest on their kids saver account. I’ve got kids who are of the age to get pocket money, so I chaecked it out.
There are some terms and conditions. Basically, you only earn 10% if you make deposits and not withdrawals, and only if each month you deposit between $25 and $250. After 12 month, the account resets to $1 (and the balance is shifted to a lower rate account).
You can’t start with more than $250, and you can’t deposit more than $250 a month.
So what looks pretty nice to start with, 10%!!, actually is somewhat less. If you had $3000 and trickled it in to the account to make the $250 a month maximum deposits, the total interest would be $167.56, or about 5.5%.
Of course, there is no reason you couldn’t keep that money in a higher rate saver account before you deposit, but most also have withdrawal penalties. If you used ubank for the balance, it would pay 6.0% on the declining balance. If you started with $3000 and transferred it into bankwest $250 a month, after a year ubank would pay you $82.50.
Obviously, both these deals are predicated on marketing – you will be ill disciplined in your payments, and once you have an account you will go on to use them for loans/mortgages/credit cards etc.
But if you are smart and organised, you can get a pretty nice return, a touch over 8%, or $250 interest a year on $3k. For me, I’ll be trying to scratch up $3000 to deposit in a kids name and see if we can achieve the rates suggested. I’ll post in a year or two to report back.

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