Compare kids term deposits
Compare kids term deposits at RateCity, and view options with competitive interest rates and features to help their nest eggs grow.
80+ term deposit providers in RateCity’s database
130+ term deposit products in RateCity’s database
Updated on
You no longer need to rely on the humble piggy bank to grow a nest egg of savings for your children or teach them financial literacy. There are a range of term deposits available for applicants under 18 that could be worth exploring.
Children’s term deposits are as simple to use and understand as their adult counterparts. While the range of options is not as extensive as adult accounts, there are still some available to compare if you want to lock away a lump sum for your children that will accrue interest over a fixed period.
Features to look for in a kid’s term deposit
Just as with an adult term deposit, there are key features to look for and compare in a kid’s term deposit.
Sr No. | Feature | About |
1 | Interest rate | The most significant factor impacting overall return on investment. The interest rate determines how much you will earn on top of the initial deposit over a fixed period. The higher the interest rate the greater the rate of return, generally speaking. |
2 | Fixed term | The length of time you will lock the funds away. This can either be a short-term deposit (1-12 months) or a long-term deposit (1-5 years). Often, providers offer higher interest rates on long-term deposits to have your funds on their books for longer. However, if interest rates were to increase over this term, you may be locked in at a lower market average rate. |
3 | Interest payment frequency | Term deposit providers may pay interest on the following terms:
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4 | Minimum deposit | You may need to deposit a minimum amount to qualify to open the kids term deposit. This could be anywhere from $1,000 - $5,000, depending on the provider. |
5 | Maximum balance | On the flip side, some providers will cap the interest rate you can earn if you exceed a maximum balance. For example, a provider may offer its highest rate to term deposits with balances under $250,000. If your balance was, say, $300,000, you may qualify for a lower interest rate. |
6 | Rollover terms |
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What are the benefits of a children’s term deposit?
Lower risk investment
Term deposits are considered a relatively low risk investment option compared to say, property or shares. When it comes to your children’s savings, you can rest easy knowing that their funds are locked away securely and are accruing interest. Additionally, you will be able to calculate ahead of time exactly how much interest you’ll earn as both the interest rate and term are fixed. This allows you to essentially guarantee what your return on investment will be.
Additionally, if you choose an Authorised Deposit-Taking Institutions (ADI) as your provider, any deposit products (like a term deposit) will be protected under the Australian Government’s Financial Claims Scheme. This states that deposits up to $250,000, for each account holder at any ADI are protected in the worst-case scenario the provider were to go under.
Teach financial literacy
If your children have a habit of wanting to dip into their savings accounts and spend their pocket money, a term deposit could be an option to help you teach them how to manage their spending. As the funds are locked away for a set period, they will be unable to make any withdrawals until the term ends. Not only could this help you to show children how to save for a goal, it could also help them to understand the risks of overspending and how to be patient with money.
Low maintenance
If you are the set and forget type, a term deposit does not require a lot of work to maintain. You do not need to jump through hoops each month to meet minimum deposits or make a required number of transactions to earn the highest interest rate. You simply need to deposit the funds into the account, which will then earn interest at a fixed rate over the agreed-upon period.
What are the downsides of a children’s term deposit?
Less flexibility
If you need to access the funds early for any reason, you will likely need to pay a costly break fee. Providers understandably do not want to encourage customers from accessing their term deposit funds early, so you will have to pay a penalty if you do so. In this way, a term deposit can be much less flexible than using a kid’s savings account that allows you to make withdrawals when needed.
Fixed rates
A term deposit interest rate is fixed, meaning it will not change over the term deposit period, whether three months or 36 months. While this can be helpful for budgeting and projecting your return on investment, if interest rates were to rise, you would miss out on additional earnings.
This is because term deposits are generally subject to market conditions, meaning that if the Reserve Bank of Australia hikes the cash rate, your provider may pass that increase on to its term deposit rates. If interest rates rise, and your account is locked in at a lower rate over a period of years, you may miss out on a greater return compared to if you chose a shorter term, or opted for a savings account with a variable interest rate.
Benefits
- Lower risk investment
- Teach financial literacy
- Low maintenance
Drawbacks
- Less flexibility
- Miss out on higher return if rates rise
How much could your children earn with a term deposit?
As a term deposit offers a fixed rate and term, you can easily calculate today what your return on investment will be at maturity.
Simply hop onto RateCity’s Term Deposit Calculator and follow these steps:
- Enter your deposit amount: Enter how much you'd like to start a child's term deposit with.
- Enter the term length : Decide on the term length. That could be as little as three months or as high as 36 months. Each will determine how much interest can be accrued over time.
- Enter the interest rate: Your interest rate determines the rate at which interest accrues over time, so you can see what various accounts will do with different rates.
- Press calculate: We'll provide the expected final balance for the end of your term deposit.
For example, a $30,000 deposit amount in a 12-month term deposit at a rate of 3.5% would become $31,050 at the end of the term.
Calculate your potential return with a term deposit today
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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.
