Halifax Childs Account

dora37

Hi,

I have been looking at Martins advise for a childrens account and am very interested in the Halifax account

Halifax allows variable deposits of £10-£100 each month, meaning the most you can pay in is £1200 a year; but as it only lasts a year, the average balance you can have in is £600. Not such a huge sum, but it still pays better than elsewhere.

What I don't understand is - if the account can be held for 12 months with a max deposit if £100 - why would the balance be only £600? I don't know if I've misread it - but I just don't get it!

Can anyone make the penny drop with me?

R00STER00

It means the average balance over the year will be £600. This is only stated in order to calculate roughly how much interest will be earned in the 12 months.

At the end of the 12 months you will have £1200 plus the interest which will be approx 10% * 600 = £60.

(Edit: forgot to mention I also have one of these and if you have less than £100 per month to save it is an unbeatable rate)

Robert_Sterling_3

The £100 put in in month 1 is in for 12 months
The £100 put in in month 2 is in for 11 Months
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The £100 put in in month 11 is in for 2 months
The £100 put in in month 12 is ion for 1 month

So altogether

You have £100 earning interest for 78 months ( 1 + 2 + 3 + + + + 11 + 12 = 78 )

This is rather like having £1200 in for 6.5 months.

Interest approx £65 maximum

grumbler

dora37 wrote:

What I don't understand is - if the account can be held for 12 months with a max deposit if £100 - why would the balance be only £600? I don't know if I've misread it - but I just don't get it!

I think you missed the key word - average.
As (assuming maximum monthly deposits) the balance grows gradually from £0 at start to £1200 at the end the average balance during 12-months is about (£0+£1200)/2=£600. In fact it is £650 - see Regular Savings Accounts discussion.

Robert_Sterling_3

It is not the balance that is £600
The final balance is £1200 + the interest.
The interest is similar to what you would get by having £650 at the same interest rate for 12 months.

Halifax usually has other conditions which make the interest earned slightly less.

dora37

R00STER00 wrote:

It means the average balance over the year will be £600. This is only stated in order to calculate roughly how much interest will be earned in the 12 months.

At the end of the 12 months you will have £1200 plus the interest which will be approx 10% * 600 = £60.

(Edit: forgot to mention I also have one of these and if you have less than £100 per month to save it is an unbeatable rate)

Ok it's Friday!! I get it now - AVERAGE AVERAGE AVERAGE

Robert_Sterling_3

The average balance over the year is actually £650.00