Spotlight: Little Rock Instant Access Acount

The deal

Northern Rock has launched a kids' savings account paying 3 per cent gross.

The good points

It can be opened with as little as £1 and while the 3 per cent gross rate isn't a market leader, it is better than many. Withdrawals are notice-free and must be countersigned by an adult trustee. Kids may be pleased by free gifts offered.

The bad points

You should never choose an account based on the free gifts offered. Interest is only added annually – in July. The account is only available through Northern Rock branches.

Conclusion

Northern Rock is re-entering the savings market with a range of deals ahead of a possible remutualisation by the next government. Any account which encourages kids to save is welcomed but there are better deals elsewhere. Bath Investment's instant access Future Builder account pays 5 per cent gross. Bear in mind that to ensure kids earn interest tax–free you'll need to fill out form R85 available from HM Revenue and Customs. Children can earn up to £6,475 in a tax year without having to pay tax.