This is a guest post that will be of particular interest to my UK readers.  For all readers, have you opened savings accounts for your children?  When did you open them?  We opened one for my son when he was four years old.

The sooner a child starts with a savings account, the better. With the global economy under pressure at the moment, investing in a cash isa for your child seems like a good idea.

Since a child will not use most of the money until later in their life, finding an account with a good interest rate will pay off over time.

A pre-determined amount in cash isa accounts is tax free and whilst tax might not be an issue with a child it’s always best to protect against it wherever possible.

Many of these accounts also offer a bonus. Most accounts aimed at children do not have the added benefit of a bonus.

If you open an account for your child and you can transfer money from your account to the child’s account, it will make your life a lot easier. No need to stand in line to pay cash into the account.

If you make use of an account that you can open and operate online, you can keep an eye on it from your armchair at home. While dinner is cooking, you can access the account for transfers or a balance.

Many of the accounts designed specifically for children, however, require that you visit a branch or communicate via the telephone or mail.

It will be necessary to compare products to find out what the minimum opening balance for each account is. Many require only a small amount with which to open the account. Others require more substantial amounts.

You may decide to make regular monthly payments into your child’s account. In certain cases, two monthly payments may be missed per year. This may come in handy over the Christmas period when expenses rocket.

With fixed rate bonds, the maximum amount that may be invested could be capped. In the event that you want to save more for your child, you will have to look at another type of account.

You may have planned the account for your child as a kick-off to their grown-up life or even as a study “plan”. However, should money be needed earlier, you will want to know that you can access it.

An account that offers unlimited withdrawals without giving notice will be helpful in times of an emergency. An emergency might be new ballet shoes that you have not budgeted for or it might be a tour that your son wants to go on.

Other accounts will not allow withdrawals within the 12 month fixed rate period. Such an account will pay higher interest rates than one that allows withdrawals, if and when. The interest in this account will be paid on the maturity date.

Since the interest rates are high on many of these accounts, the institutions will limit the accounts to one per child.

Cash cards are not available with fixed term accounts and most of the transactions are done at the branch.

Whether you decide upon a cash isa, a fixed rate bond or a flexible children’s account, the fact remains that saving is important and when you teach your children at an early age to save, you have taught them well.

This guest post was brought to you by Money Supermarket.

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