Question of Finance: What is the best account for my young children?
Q I have a 20-month-old daughter and another baby due at the end of April.
I would like to set up savings accounts for both of them and I wondered whether you would recommend a particular bank?
Alternatively, would I be better off going for a post office or a credit union account?
A I have two girls (nine and six) and I have two AIB Parent Saver accounts. These accounts pay 5pc, but for a year only and there is a €200 monthly maximum you can put into each. After a year, the money is transferred into a parent deposit account paying 0.5pc.
The banks know that inertia will earn them money, in that most of us (me included) will be too lazy to take our money out of the likes of the parent deposit account and put it somewhere where you will get a better return.
Other good regular savings accounts include the EBS Building Society one, which pays 4pc with a monthly maximum of €1,000, and Permanent TSB's one, which pays 3.75pc and has the same monthly maximum.
Each credit union has a different rate (they are all run independently) so you need to check your local one out.
It is well worth being a member of a credit union, if you are not already a member of one.
An Post's Childcare Savings account pays just 1pc.
But it also has a Childcare Plus account. This is a long-term account where you are encouraged to lodge the child benefit monthly payment from the State.
You put a maximum of €12,000 into it each year and you are guaranteed 20pc interest, tax-free, if you leave it in the account for five years.
Apart from the Childcare Plus account, all the other savings products mentioned above are subject to DIRT (deposit interest retention tax) at 25pc.