School bullies: Banks target our kids

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Claire and Julia Wastell may only be eight and ten, but they are already being taught the value of a dollar.

Related story: Rate cut class action

Each has a bank savings account, and puts a small percentage of their pocket and birthday money into their account.

"It's important because you have to save up for things later in life, like a house or a car; it's very important," they said.

It is an invaluable lesson being taught to them by their dad, Rohan.

But now the girls are learning a savage lesson about banks - that every cent they save is a target - with some financial institutions lowering deposit rates on children's savings accounts.

More: Banks refuse to pass on rate cut

"It's a bit of disincentive by the big organisations to do that," the girl's father Rohan told Today Tonight.

"I think they should be doing everything they can to encourage them."

Christopher Zinn from Choice calls it the "thin edge of the wedge."

"(Children) might have a couple of thousands of dollars in (their account) thanks to any bequests or generous relatives, and they see that it's just got two cents worth of interest for the past couple of months, that won't give them much incentive to have faith in the financial institution," he said.

Banks tactics to increase profits

And many banks are directly targeting those children, but cutting interest rates on its smart junior saver accounts.

And it is not just one bank that is the bully boy. Right across the board little bank books have been slashed. All of these particular accounts will now earn a quarter of a per cent less, and that makes one in particular, Bank West, look pretty sick.

Christopher Zinn says we should make kids a priority.

"Unless you make a deposit every month, (junior accounts) really do not pay you anything really worth considering," Christopher said.

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All the banks blame historically low bank interest margins.

David Townsend is 16. He's been a savvy saver for years, transferring $20 into a savings account each week.

He learnt how touchy banks can be after they slugged him for missing a few deposits. He is now in red, owing the bank $133.

The only gold-star bank in our opinion is the Commonwealth Bank.

So far the Commonwealth hasn't shaved a cent off kid's interest rates, but they would not rule out further cuts in the future.

Note: Late this afternoon, the NAB reversed its decision to cut interest rates on kid's accounts.