"consider investing for your child."
Teenagers could get £50 for free by switching to a different bank account, according to Money Saving Expert Martin Lewis.
The consumer finance expert has urged parents and grandparents to think carefully about how they save or invest money for children.
He advised families to consider Junior ISAs and high-interest savings accounts instead of automatically choosing Premium Bonds.
He said: “As a nation, we’re too risk-averse, which is why my biggest push is for parents or grandparents to consider investing for your child.
“And no, I don’t mean Premium Bonds (which, as I’ll explain, often underperform for children).
“Some parents who lack financial confidence or skills can feel a guilt that they may be subserving their kids because of it. So today I want us to try and help you with that.”
Why a Junior ISA could be the Best Option
Parents can save or invest for their child through a Junior ISA (JISA), which is a tax-free account for under-18s.
Up to £9,000 can be paid into a child’s JISAs during each tax year, with the allowance applying across all JISA accounts.
There are two types of JISA: cash JISAs, where the interest is tax-free, and Stocks and Shares JISAs, where investment gains and dividends are not taxed.
A child can have both types of JISA, but the combined amount paid into them cannot exceed £9,000 per tax year.
A JISA must be opened by a parent or guardian with parental responsibility. The child can take control of the account from the age of 16, although they cannot withdraw the money until they turn 18.
Some JISAs offer more than 3% interest, while some savings accounts for young people offer rates of up to 5% a year.
How could your Teen get £50?
One children’s bank account could give eligible teenagers a £50 bonus.
Mr Lewis highlighted the Santander 123 Mini account, which pays £50 into the account of new customers aged from 13 up to and including 17.
To receive the bonus, £50 must be paid into the account within 31 days.
The account also offers a contactless debit card and tiered interest on savings.
It pays 3% on savings between £1,500 and £2,000, 2% between £1,000 and £1,500, and 1% on balances below £1,000.
No interest is paid on savings above £2,000.
What about Premium Bonds?
Premium Bonds have been a popular way for parents and grandparents to save or gift money to children.
However, Martin Lewis said that “many would’ve done better sticking with normal top savings”.
Premium Bonds are government-backed savings products where returns are paid through a monthly prize draw rather than a standard interest rate.
Mr Lewis said the current prize rate is 4.35%, although this does not mean every Premium Bond holder will receive this return.
Premium Bonds can be useful for people who pay tax on their savings interest and have already used their ISA allowance.
However, Mr Lewis said it is best to have more than £5,000 invested in Premium Bonds to have a better chance of earning closer to the published prize fund rate.
For children, who typically have smaller amounts saved and are not taxpayers on their savings interest, he said Premium Bonds may not be the best option.
