Kids savings accounts

No fees: One of the key advantages of opening a kids savings account is that most banks don't charge a monthly account fee for children.

Bonus interest rate: Children's savings accounts generally offer bonus interest rates to encourage little ones to save, but compare carefully as not all kids accounts are competitive. Some banks actually offer lower bonus rates on kids accounts than on their standard savings accounts.

Non restrictive conditions: The best kids savings accounts pay competitive ongoing interest rates without the restrictive conditions, but unfortunately many banks require kids to meet monthly deposit or withdrawal conditions to earn bonus interest. It's important to read the fine print to decide whether the account will actually suit your child's savings habits.

Kid-friendly features: Many bank websites have online graphs or other fun tools and games to involve kids in understanding how much they are saving over time.

Easy access: It's a good idea to check if the account offers facilities such as online banking, phone banking and ATM access. This will make it easier for you to conveniently manage the account and introduce your child to the idea of secure Internet banking. Amongst other things, you can teach them the importance of not giving their PINs and passwords to anyone.

Automate savings: It can be tempting to go for the highest bonus rate offer but be sure that your child will be able to meet the account conditions each month as many kids savings accounts pay minimal interest if conditions are not met. The best way to ensure you'll always get the rate is to set up an automatic deposit on pocketmoney day.

Long-term goals: If this is all about teaching your child the benefits of long-term savings. If your child can't make regular deposits look for an account that has a good ongoing rate.

Watch for account sweeping: Account sweeping is when you get a high rate for a set period (say a year) and after this period the balance gets swept into a lower earning interest account. You then rebuild the balance in the high interest account. These accounts can be worthwhile to get the highest interest but you'd need to be diligent about moving your money out of the low interest account as soon as possible.

Consider a regular savings account: Often regular savings accounts have better rates than kids accounts so this can be a good way to get a higher rate of interest. The only downside to this is that generally you'll have to put the account in your name and not your child's, so you'll have to include the interest earned as part of your taxable income.

Don't just set and forget: Just like regular savings accounts, rates on children's accounts can change. You should compare interest rates annually to make sure your kids are still getting the best savings account deal with Mozo's handy comparison tool.