Our picks

Best account for transactions & savings

The TSB Bank Freestyle Junior came out on top as both a transaction account and a savings account.

It has no service, monthly account or transaction fees – and no charge if another bank’s ATM is used. It pays an attractive 3.5 percent interest rate and unlike the TSB Bank Horizon has no minimum-balance requirement. This account’s available for children aged from 7 to 16.

Branch access with few withdrawals

If you need access to a bank’s branch and don’t plan to make any withdrawals, SBS Bank's Incentive Saver and TSB Bank's Horizon might suit.

The SBS account pays 3 percent interest if no withdrawals are made in a month (and 0.5 percent otherwise) and it has no fees or charges. At 3.5 percent interest TSB's Horizon account is up there with the best but kids pay dearly for withdrawing any funds – the fee is a whopping $5 each time a withdrawal is made. And the TSB Bank’s Horizon’s requirement for a minimum balance of $1000 won’t suit every young saver. However, one point to consider is although SBS and TSB Bank have nationwide coverage – they have fewer branches than the larger banks.

Neither the SBS Bank's Incentive Saver nor TSB Bank's Horizon accounts came with an ATM card.

Savings account with ATM access

If your children need access to their savings via an ATM card the PSIS accounts are a good option.

The PSIS Dollars and Sense account (available for children aged up to 12) pays up to 2.75 percent interest and charges no fees (not even for using another bank’s ATM machine). Funds can be withdrawn from a PSIS branch as well as by ATM card from age seven. The PSIS Dosh account is similar – but its interest (2.75 to 3 percent) is paid only if no more than one withdrawal is made each month and the account is available only to those aged 13 to 18.

Note: PSIS is not technically a registered bank; it’s a “financial co-operative” owned by and run for its customers. But – for simplicity – we’ve referred to all institutions in this article as banks.

Savings account with restricted access

If it’s purely a savings account you’re after and you want to restrict your child's access to their savings, RaboPlus Online Call account could do the trick.

With 3.5 percent interest, this account is one of the most generous. It has no service, monthly account or transaction fees. No minimum balance is required and access isn’t restricted to any particular age group. But there’s no access to a bank branch or an ATM machine, so if your child needs to withdraw funds this can only be done via an online transfer to their nominated account at another bank. The nominated bank may charge account or transaction fees.

The rest

We also reviewed accounts from ANZ, ASB, BNZ, Kiwibank, The National Bank, and Westpac. These come with ATM cards and usually have no monthly account or transaction fees; but they can charge service fees (such as dishonour fees) and do charge a fee if another bank's ATM machine is used (but if you're with ANZ or National you can use both banks’ ATMs without incurring a charge).

An interest rate of 2.5 percent is common among these accounts although The National Bank School Plus account pays less than 2 percent unless you have more than $2500 in your account.

Westpac Starter Pac

Westpac has recently launched a kids' banking product called Starter Pac: if your child has a savings account with Westpac and also joins KiwiSaver with Westpac – it'll waive the KiwiSaver administration fee of $2.59 per month as long as a deposit is made every year into the savings account. The fee is waived for 2010; normal fees apply once the child turns 19.