So you want to teach your kids good money habits and the value of saving money?
The traditional way is to take the kids down to the local bank branch and open a savings account right?
Then the kids can make a small regular deposit, watch their money grow with interest payments and make an occasional withdrawal when they want to buy something they have been saving for.
That will teach them the value of saving and maintaining a bank account right?
That's the reaction of Australia's banks - and credit unions - to that philosophy.
Every adult with a bank account knows how tricky banks can be when it comes to fees and delivering on their advertised headline interest rates.
But it is still a bit of shock to find out that all of the children's savings accounts on the market now also have tricky conditions and some fairly nasty fees.
In fact finding a good account for the kids that will teach them the value of saving, rather than the instant gratification of spending, is not an easy proposition.
And 'nasty' and 'tricky' aren't the way we describe children's bank accounts.
Those are some of the nicer words used by consumer lobby group Choice, which has reviewed 26 savings accounts for children and blasted the industry for their "penny-pinching" fees.
The banks and credit unions are "quick to punish kids when they reach their savings goal," said Tom "with a savage interest rate cut to withdraw their money."
Tom names online transfer fees, ATM fees (for using your own bank's ATM), big fees for making a withdrawal in branch and coin counting fees as among the nastiest fees the banks and credit unions are slugging children with.
Australia's biggest credit union, CUA, has a Youth eSaver Account for kids aged 10 - 17 years with a headline interest rate currently set at 5.05 per cent with no account keeping fees.
That sounds great right?
But what lessons are CUA teaching your child about banking institutions when they slug them $20 for making a withdrawal in branch?
Yes you read that right - CUA is charging kids $20 to make a branch withdrawal.
OK so what about Bankwest's Kids Bonus Saver account. This account has been rated the "Best Kids Savings Account" by Money Magazine every year for the last eight years. It has a headline bonus interest rate of 5.75 per cent with no account fees.
That sounds great right?
Well Choice says Bankwest's Kids Bonus Saver is the most complex on the market.
Each month the child must make a deposit of at least $25, but not more than $250, with no withdrawals, to get the bonus rate. Otherwise they get 0.01 per cent.
But the really big catch with the Bankwest account is at the one year anniversary of opening the account, all but one dollar of your child's money is automatically transferred to a Bankwest Children's Savings Account which has a 1 per cent rate for balances under $3000 and two per cent up to $10,000.
The current rate of inflation is 2.9 per cent, so Bankwest will teach your child that money in the bank loses its spending power fast.
Commonwealth Bank has always been the market leader in children's banking and still has a school banking programme in 47 per cent of Australian schools.
CommBank's Youth Saver account offers a reward, such as a handball or pencils, after 10 deposits (of any size) made through the school.
Suncorp's Kids Savings Account is the only children's account that allows kids to make a withdrawal (one per month) and still earn a significant rate of 4.0 per cent. However they must still make a monthly deposit of $20.
It's also worth noting that Suncorp charge a five per cent coin counting fee. Suncorp say they won't charge children that fee, however that exception is not in writing anywhere in the product disclosure documents.
National Australia Bank has given up on this market completely and no longer offers savings accounts specifically for kids.
The two accounts with very high headline rates - the CUA and Bankwest accounts - both have big disadvantages.
One of the big banks - CommBank, ANZ or Westpac - may be your best option concludes Choice because at least they offer your child the experience of a face-face banking experience with their thousands of branches.
CommBank's school program is still the stand-out educational experience and now Commonwealth Bank is rolling out an app for parents to pay for school lunches and fees.
Business & Finance Journalist
Jason is a business and finance journalist with 20 years experience, and is also a member of the SingleMum.com.au Expert Opinion Panel. He has a regular weekly column in the Sunday Mail (Brisbane) and writes regularly for the Business Daily section of the Herald Sun in Melbourne and many other newspapers and magazines.
Jason's personal website is www.centrelinknews.com.au...read Jason Bryce's Profile here
Disclaimer: The views of authors on our website are not necessarily representative of those views of our website. Articles contain only general information, correct at the date of publication. For advice regarding your own personal circumstances, always seek individual advice from a qualified professional. This article may not be reprinted, reproduced, or retransmitted in whole or in part without the express written consent of SingleMum.com.au. Please read the complete Singlemum.com.au Disclaimer here