"Every baby born in 2017" could be eligible for a $200 credit when to-be parents
open the bank's Bumps Savings account, according to the marketing material issued to existing customers.
The idea is to deposit a little bit of money every week to provide a growing child with a small nest egg.
But the bonus credit will only be redeemable on the child's 16th birthday. If the
account is closed before then, that $200 credit will be forfeited.
Details on the account are scarce ahead of its launch in early April. A
dedicated webpage suggests the interest rate will be 1.5%.
Westpac calculates an account in which $20 is deposited per week – in addition to the $200 deposit
when the account is opened – will yield $19,054 by the time the child
turns 16. Over the lifetime of the 16-year savings account, the interest earned
will amount to $2214.
Inflation will also impact the buying power of $20. Today you would need $30.43 to buy what $20 could've purchased 16 years ago.
There are no monthly fees, but the website states
"other fees may apply". Until the full terms and conditions are available, it's difficult to see what benefit this account has over many other savings options when it comes to putting money away for kids.
Signing up customers early is important for banks as it paves the way for
future business – for instance, 26% subscribe to a credit card offered by
their existing financial institution. And Westpac isn't the only bank working to win young customers. Commonwealth
Bank has been operating its Dollarmites program for 80 years.
CHOICE has a few tips and tricks for parents interested
in opening a savings account for children.
DISCLOSURE FROM CHOICE: Our CEO Alan Kirkland is part of an independent expert panel appointed by the federal government to review the framework for external dispute resolution and complaints in financial services. You can find out more about the review and make a submission through the Treasury's website.