Seven in 10 (70%) parents in the UK have never moved their children’s savings into an account paying a higher rate of interest, Scottish Friendly research has found.

A survey of 1,000 parents by the financial mutual found that two in five (41%) said they never shop around for better deals for their child’s money.

Currently, the highest paying children’s saving account offers interest of 5.8%, but Scottish Friendly has said that few parents are taking advantage of better deals.

However, three in five (60%) parents expressed concern that the money they are saving for their children is receiving a lower rate of interest than the current rate of inflation.

Although price rises are affecting UK household incomes, many parents are prioritising saving for their children, with two thirds (66%) saying that they are more motivated to boost their children’s savings than they are their own, compared to just 6% who said the opposite.

Scottish Friendly said that since the cost of living crisis began to bite in 2021, 28% of parents have increased their contributions into their children’s savings. Twenty-nine per cent have reduced the amount they save, while 43% said that their contributions have remained the same.

Although some parents have increased their contributions, nearly nine in 10 (87%) said that they worry about how much they are putting away, with two in five (40%) admitting that they could afford to save more.

Savings specialist at Scottish Friendly, Kevin Brown, said: “Parents naturally want to give their children the best start in life and to help them out financially at important moments. Whether it’s buying their first car, contributing towards their university costs or helping them on to the property ladder, there are a variety of reasons why parents choose to save money for their kids.

“However, saving has become a lot harder for many parents as household incomes have been squeezed tightly by rising living costs. It’s really important that any money they do set aside for their children is working as hard as possible for them.

“This could mean, for example, shopping around to find accounts paying the highest rate of interest, as the difference between the worst and best paying savings accounts can be significant.

“Parents who are putting money aside for their kids to use in five to ten years or more, may also think about investing to try and beat inflation. Investing could offer growth potential but parents also need to remember that, as is the case with all investments, they could get back less than they pay in.”

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