Northern Rock, the publically owned savings and mortgage bank, has launched a new children’s savings account which tops the Which? Best Rate tables.
The new savings account, called the Little Rock account, pays 3% AER on balances of £1 or more, up to a maximum deposit of £10,000. The next best-paying account in our Which? Best Rate tables is from the Stafford Railway Building Society which pays 2.25% AER.
Little Rock is an instant-access account available to savers under 16. There are no penalties for withdrawing money and no limits on the number of withdrawals that can be made. It’s a branch-based account and comes with a passbook.
As with other children’s accounts, interest will be paid net of tax unless you complete a Form R85 on behalf of your child. This allows the tax to be paid gross. Parents who pay money into accounts for their children can become liable for income tax if the gross interest paid on the savings is more than £100. Our Tax and your Children guide explains more.
Melanie Green, Principal Researcher, said: ‘The children’s savings account market has been pretty stagnant so it’s good to see this new account offering such a competitive rate of interest. As with all savings accounts though make sure you keep an eye on the interest rate. Banks and building societies have a habit of introducing new accounts with great rates but aren’t so good at making sure they remain competitive over time.’
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