Ever opportunistic, step forward financial companies with a range of ways of dressing up cash for kids - as something relatively imaginative and lasting, as well as a route to encouraging responsibility and savings- savvy in the little dears.
Children's Bonus Bonds from the Post Office and many of the specially- branded building soc-iety accounts for youngsters do offer decent rates and low-risk investment. Bonus Bonds, which can be bought for pounds 25 for anyone under 16, pay a guaranteed interest rate of 6.75 per cent a year, tax-free. They must be held for five years to yield the full rate of interest, and, without parents' or guardians' permission, children cannot touch the money until they are 16.
Several banks and building societies offer savings accounts aimed at children, which pay up to 6 per cent on relatively small sums. Again, the interest is tax-free, as long as the savers - or parents if the children are under 16 - fill in form R85, which is available in building societies.
Some of the high street names offer goodies to account-holders: Barclays Bank gives a pounds 5 W H Smith voucher and magazines on its Barclaysplus children's account. Nationwide Building Society gives a CD and welcome pack with its Smart account. These accounts pay 3.5 and 3.2 per cent, respectively, on balances as little as pounds 1.
The higher rates tend to come from smaller institutions. Coventry Building Society's Interest Zone account pays 4.75 per cent on pounds 1, according to Moneyfacts, a rate monitoring service. Leeds & Holbeck's Youngsaver pays 6 per cent, but it requires a balance of pounds 1,000.
Stock market investments, like unit and investment trusts, should give the best returns if held long term. These, however, cannot be held directly by children. The Association of Unit Trusts and Investment Funds has a free factsheet on saving for children (0181-207 1361). Baby bonds from friendly societies are usually less good value.
If you want to wean the kids off ideas about the National Lottery, premium bonds, bought from post offices, are a low-risk gamble - with the potential to win a million. But the minimum purchase is pounds 100.