The HSBC MySavings account is offering 4.25 percent with interest calculated daily and paid into the account monthly. The higher interest rate applies to balances below £3,000 with balances above this amount getting a 1.6 percent rate of interest.
This means if a person deposited £1,000, after 12 months the balance would be at £1,042.50.
The account is open to people aged between seven and 17 and is intended to help young people learn to “handle money wisely”.
Once the account holder turns 11, they will be able to manage the account online and using mobile banking.
Lucinda O’Brien, personal finance expert at money.co.uk, spoke about the benefits of the account.
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She said: “From the age of 11, your child will be able to access online and mobile banking and they’ll receive a debit card so they can withdraw and spend money in shops.
“The account can be set up with as little as £10, which is a great way to start saving some pocket money.”
Account holders under the age of 11 get a Cash Book, which they can use to pay in and take out money in branch.
If they want to take out more than £50 or move money over this amount into another account, they will need their parent or guardian’s permission.
The base rate is currently at 4.25 percent with some analysts predicting it will go up again. The central bank has continually upped the rate in efforts to tackle inflation, which remains high, at 10.1 percent.
Inflation is expected to drop over the course of the year meaning now could be a good time to switch.
Ms O’Brien said previously: “If anyone has a lump sum to save, now might be the time to snap up these savings rates before the expected drop in inflation.”
She said interest rates on savings accounts are “stalling” and not changing as dramatically week on week as they have been previously.
Sarah Coles, head of personal finance at Hargreaves Lansdown, recently told Express.co.uk what savers can do to make sure they get the best return on their savings.
She said: “For variable rates, incremental changes really add up over time. If you haven’t switched easy access accounts for some time, it’s worth checking what else is out there, because you can currently make more than 3.25 percent.
“You could wait for rates to peak before doing this, but if your money is in an unrewarding high street account in the interim, you risk missing out on significant interest in the interim.”
The savings expert added: “The trouble is that you won’t know you’ve reached the peak until it has passed and is on the way back down.
“Instead, it’s worth looking at the best rates available today, and deciding whether you’re happy to fix.”
