Halifax has cut the interest rate it pays on its Kids’ Saver account, despite expectations of an imminent increase in the Bank of England base rate.
Savers into the account will have their returns cut from 1.45% to 1% on savings up to £5,000. On balances above that the account will continue to pay 0.01%,
The change has already come into effect for new customers and existing accountholders will have their returns cut from 25 January 2022.
The account was once a best-buy but other providers have already been offering better rates. According to Moneyfacts, several other high street banks pay a better rate on instant access savings for children, although most entail a parent or grandparent being an existing customer.
The market leader is Santander, which is paying up to 3% on its 123 Mini Account, although it can be opened only by someone with a current account at the bank who has to hold it in trust for the child. HSBC’s Children’s Account pays 2.5% and is available to the children and grandchildren of its Premier Account customers.
Halifax says the change follows regular reviews of its products, and that customers can get a higher rate on some of its other products.
A spokesperson said: “We have written to customers with Kids’ Saver accounts to let them know their rate will be changing.
“We continue to offer a competitive range of accounts for younger savers, including our Halifax Kids’ Monthly Saver at 2.5%, and make it easy for customers to check their rate on their account or move their money if there is a different account that is better for them.”
Monthly savings accounts do typically offer higher rates than those available on instant access, but requite a regular commitment to save and the headline interest rate is earned only on the early contributions.