IF YOU are unsure about what to get the children in your life for Christmas it could be worth considering giving the gift of money.

Cash is always popular and a cheque will have some novelty value in these days of digital banking. But there are several other options that could give the little ones something to treasure beyond the festive season.

One is a bank or building society account. Most banks and building societies offer children’s accounts that pay healthy rates of interest - much healthier than the rates generally available to adults.

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Anna Bowes, director at independent savings adviser Savings Champion, said: “A savings account is a useful Christmas present – and it doesn’t need batteries. It helps children learn the value of money.”

Halifax is offering an interest rate of 4.5 per cent on its Kids’ Regular Saver account, fixed for a year, although it does not permit withdrawals. After 12 months, the money is transferred to a Young Saver account, which allows withdrawals but only pays two per cent.

Saffron Building Society’s Children’s Regular Saver account pays four per cent for a year and allows withdrawals. After 12 months the account becomes a Maturity Easy Access account paying just 0.5 per cent.

Nationwide and Barclays both pay 3.5 per cent on their children’s accounts. If you gave just £100 a year in an account paying 3.5 per cent, the child could have more than £1,200 after 10 years and more than £2,500 after 18 years, according to figures from Savings Champion.

Kevin Pratt, consumer affairs spokesperson at price comparison website MoneySuperMarket, warned parents to keep a keen eye on interest rates.

“There are two golden rules,” he said. “First, choose according to the rate, not any promotional offers such as soft toys. Second, be prepared to switch the account if the rate falls and there’s a better deal elsewhere.”

Parents should also watch out for the £100 rule. If the child’s account is funded by the parent and earns more than £100 in interest in a year, the parent could be liable for tax.

However, every adult has a personal savings allowance of £1,000 a year if they are a basic-rate taxpayer (£500 for higher-rate taxpayers). That is the amount of interest they can earn tax-free.

With interest rates at historically low levels, you would probably need to have total savings of around £65,000 as a basic-rate taxpayer before tax became a concern.

If you pay tax at 40 per cent, you would need to have total savings of around £33,000 to trigger a tax liability on the interest.

Premium bonds could be another option. Run by government-backed National Savings & Investments these offer chunky cash prizes every month of up to £1 million, with the lowest prize valued at £25.

However, the chances of winning anything are one in 24,500 in each monthly draw and some people never see much if any return on their bond holdings. Overall, the rate of return paid out on bonds is 1.4 per cent.

Parents, legal guardians, grandparents and great-grandparents can buy bonds on behalf of children under the age of 16. The minimum purchase is £100, which will buy 100 individual premium bonds, and the maximum is £50,000. Payouts are tax-free.

Adrian Lowcock, investment director of Architas, said: “Premium bonds are backed by the government so there is an implicit guarantee of investors’ capital. However, any prizes are down to luck and investors might not win anything.”

Alternatively, a junior ISA (JISA) could be an option. Only parents or guardians are able to establish a JISA, but once they are open anyone can contribute. The maximum investment for a JISA in the 2017/18 tax year is £4,128 although that will edge up to £4,260 in the 2018/19 tax year, which starts next April.

A cash JISA works like a savings account, but the interest is tax-free. Parents can also rest easy because the £100 rule does not apply to JISAs. Coventry Building Society pays 3.5 per cent on its cash JISA and Nationwide offers 3.25 per cent.

Another option is a stocks and shares JISA, which gives exposure to the stock market, meaning the rewards are potentially bigger but so too are the risks.

Advisers often recommend equity JISAs for children because they have time to ride out the ups and down of the market.

Lowcock said: “Putting some money into a JISA might not be on the top of everyone’s letter to Santa, but in years to come that money may have grown into a significant sum.

“A JISA taken out in a child’s first year and growing at five per cent per annum would have nearly doubled in value and be worth over £8,000 18 years later.

“In addition, you can help encourage an interest in savings and investing at an early age. This habit is better developed sooner rather than later.”