We all know that the sooner we start saving for our kids’ third level education, the more we’ll be able to help them on their way when the big day comes to start college.
But with books and uniforms and getting the kids ready for school, setting up a college fund bank account at this time of year can get pushed aside until it’s all but forgotten. It’s a task that’s easy to put on the long finger too because when our kids start in primary school, we feel as though we have all the time in the world before we have to think about college.
The thing is that if we start saving for our kids when they first start school, we’ll have twelve years’ worth of savings available to them when they are getting ready to start at third level. And twelve years of regular saving can really add up.
Just €50 per month in a good regular saver account could return nearly €9,000 in 12 years. €100 a month could return almost €18,000, and €130 a month could yield more than €23,000.
The best accounts for this kind of saving are Regular Saver accounts. They are available from most banks and they are designed specifically to help make regular saving over the long term easy.
The good news is that unlike most other types of bank account, where interest rates have been falling steadily, Regular Savers are still paying very good rates of interest.
With so many regular saver accounts out there, it can be difficult to choose the right one. And with accounts that will be used to save for the long term, a good interest rate can make a big difference.
We’ll take a look at the best regular saver accounts currently available in the Irish market and see which ones really match up to the task of saving for college.
KBC Regular Saver Account – 3.5% AER
KBC have become known for offering strong rates of interest across their account range of savings products, and this account is no different. KBC also offers a generous maximum balance of €50,000 which should be able to hold the college funds of even the flushest kids.
Customers must deposit between €100 and €1,000 per month to maintain the interest rate, but KBC does allow two monthly payment breaks each year which is great if you need to pause your efforts for Christmas or other costly times of year.
Saving €130 per month in this account for 12 years at 3.5% AER could yield €23,209.
Permanent TSB Online Regular Saver Account – 2.85% AER
This year has seen Permanent TSB focus on their customers a little more and offer good value day-to-day banking products. Like KBC, their Online Regular Saver Account offers a generous maximum balance of €50,000 which should be more than adequate for college saving, even for parents starting before their children start school.
Customers can save anything from €1 to €1,000 per month, but there is no requirement to make a monthly deposit which could come in handy during times of unexpected expense.
Saving €130 per month in this account for 12 years at 2.85% AER could yield €22,289
Ulster Bank Special Interest Deposit Account – 2.5% AER
Ulster Bank’s Special Interest deposit account offers the flexibility of being available by phone, branch and online. The bank also allows customers to withdraw whenever they chose without giving notice or paying a penalty. Monthly deposit amounts are also very flexible with a minimum of just €1 and a maximum of €1,000
However, the 2.5% AER is offered up to a maximum of €15,000 whereby anything extra will earn just 1%. It will take almost nine years with deposits and interest to hit the €15,000 threshold on this account.
Saving €130 per month in this account for 12 years at 3.0% and then 1.0% could yield approximately €20,400.
EBS Family Savings Account – 3.1% AER
The EBS tagline is “Where Family Counts” so it is fitting that their regular saver account is called the Family Savings Account. EBS offers a good rate of interest too which will attract customers. However, with a low €12,000 maximum deposit amount it may not suit parents saving larger amounts of money.
EBS also requires that after a year, any funds saved in the Family Savings Account are moved to another account with a rate of 2.30%. Customers can add lump sums to the secondary account to the value of €50,000.
Starting to save your child benefit when your child is born rather than when your child starts school could earn mean an extra €16,000 in savings. €130 per month saved at 3.5% will return almost €39,000 after 18 years as opposed to €23,000 after 12 years.
Be aware that many regular saver accounts have low maximum deposit amounts. €12,000 is common across AIB, Bank of Ireland, EBS and Ireland State Savings so if you’re planning to save more than €85 per month, you should look into a bank with a higher limit.
Nationwide UK (Ireland) Euro Regular Saver Account
Nationwide UK offers 4.0% AER on this account which is the best regular saver rate in the marketplace right now. The account requires a monthly lodgement of at least €100 and has a maximum balance of €15,265. However, the account is also a 15 month term account. This means that once the term is up, customers will need to find another place for their money and makes this account less than ideal as a college saver.
What about the rest?
AIB Online Saver – 2.95% AER
AIB Saver – 2.85% AER
Although these accounts offer good rates of interest, they are not really suitable for long term saving. They have complicated interest payment mechanisms whereby each year, interest is paid on €1,000 in month one, €2,000 in month two and so on. Then after a year, the accounts revert back to paying interest on just €1,000 regardless of how much is in the accounts. This is fine for one year, but will seriously affect the yield on any subsequent years.
Bank of Ireland 365 Monthly Saver – 2.2%
Bank of Ireland Save to Borrow – 2.0%
Bank of Ireland Custom Account Saver – 2.0%
Bank of Ireland has a number of regular saver accounts that offer deposit amounts ranging from €9,999 to €12,000 and interest rates of between 2.0% and 2.2%. As Bank of Ireland offers the lowest deposit amounts and the lowest regular saver interest rates, they may not be the best choice for a college regular saver.