There Are Some Good Children's Saving Accounts - But Watch The Tricks

With the advent of the government's Child Trust Fund scheme aimed at encouraging parents to save for their child's future, banks and building societies are starting to heavily promote savings accounts for youngsters. But as ever there are some good ones and downright thieving ones (ie those paying less than 3%), so make sure you know what you're buying before being sucked in by the marketing.
Too Many Strings Attached
For many of the accounts there are just too many strings attached in the form of penalties for this or that. For example;
The Halifax Monthly Saver pays 5.3% but will suddenly drop to 2.55% if the account holder misses more than one deposit in any 12 month period
Bradford & Bingley's Firstsave account (ages between 13-25) pay a nice 5.0% with up to 3 withdrawls a year, anymore and the rate drops to 4.5% (still not a bad rate though)
Yes, many people can afford to save regularly but others can't so first understand which camp you fall into and plan according. For most people financial advisors say go with the account that pays the best interest alongside the most flexibility. Right now this looks like being the Saffron Walden Building Society's Ladybird account. It pays 5% (min balance £1) with NO strings.
What About Halifax's 10% Account
10% is really nothing more than a headline grabbing rate because it's only 10% up to a maximum invested £1,200
If they really want to grab headlines why don't they make the interest rate 500% on a maximum £10 :)
In reality though only 10% pa can be earned on the first £100 invested with 10% paid on the next £100 but only for 11 months and so on
The account actually yields about 6.5% per annum if you invest £100 each month
In retrospect it's a good deal which means they don't have to play stupid games with the 10% headline, just spell it out in plain English (6.5%) because that's what the consumer wants these days
More Help On Investing For Children
The Association of Investment Trust Companies has produced a very good booklet entitled 'Saving for Children'

Summary
Banks are trying to win new clients by offering tailor made savings accounts. This is good news for everyone involved especially a child's financial future. But if you really want to help your son/daughter then teaching them about saving is not enough. Concentrate on both savings AND the tricks and other sly practices that the financial institutions try on, then when they get older they'll be in a prime position to sort the wheat out from the marketing chaff.
So saving is good, but understanding how financial products really work is even better.