This evening me and my wife were browsing through some of those online saving accounts (currently with INGDirect at 6% and ANZ offers us 6.30%), and spotted this incredible offer from BankWest. Kids’ Bonus Saver, which is like their online TeleNet Saver accounts except for the junior (must be under 15), and it offers 10% interest, if you can deposit $25-$250 regularly without making withdrawal.
As they have claimed — at 10% it’s Australia’s highest children saver account. Quite a few conditions though.
- Under 15. I guess I don’t qualify this one.
- $25-$250 deposit a month. No more, no less.
- Linked with Children’s Saving Account, required.
It has no account keeping fee, and provide fast access to funds for the parents or guardians. It has those limits to ensure it is used for saving for the children (instead of someone else’s high yield saving account). We are thinking of opening one for our daughter first thing next year. Good to start saving earlier.
Do note about the tax implication though. Minors have relatively low tax free bracket at $416 in Australia, and you’ll have to pay 66 cent in a dollar earned up to $1,445 after that. Very hefty I’ll say (to prevent abuse of course). So start saving when they are young, but don’t put all your money into their saving account, unless you love ATO so much.
Where did you get the tax info from?
Hmm. I think they were right from the memory (but could be wrong because how frequent Peter C changed the tax brackets in the last few years).
Anyway. Always ask your financial adviser or accountant for advice :)
No fees on the Bonus Saver account, but are there fees for the Children’s Saver Account? Do they have net banking to check balances?
Also, what’s the formula to work out how much interest one would earn in a year, assuming a deposit of $250 and $250 deposited monthly and no withdrawals?
Jaxx — according to BankWest’s site that the saving account is fee-free (i.e no account keeping fee). I haven’t got time to read all the small prints, but it seems to be quite safe. I’ll try to organise one for my daughter early next year.
As of calculating the maximum deposit amount to stay under tax free, I think it just require a bit of component interest calculation to make sure annual interest payout is less than $416. Sorry my math is getting rusty :)