Saving for children

Scaredy_Cat_3

Not in the same league as some of the threads I have been reading here, but I am saving £10 per month for each of my 2 children into a Brittannia Building Society FirstSaver account (one account each, that is). I recently discovered (to my horror :eek:) that this account is only paying 0.75%. Took my eye off the ball for too long

Anyway, the best rate I have seen (on the MSE homepage) is the Halifax regular saver at 8%. I've done a bit of googling and can't see anything better than that.

But the downside with that one is you can't put in a lump sum. I'm happy to switch the monthly savings from Britannia to these new Halifax accounts, but can anyone suggest another account where I could put the bulk of their savings from the Britannia? They have around 1k each and the best interest rates I can see are in the 2.3% region.

martinman3

Yes, the best rate for an instant access account for children is 2.25% AER at Yorkshire BS.

There is an alternative though, which most people don't know about, if you/they don't need access to the money. You can open a fixed rate account in trust for the child at several building societies and Britannia is one of them.
They have a one year fixed rate bond paying 3.2% (180th issue) which can be opened in trust with an application form available from a branch.
http://www.britannia.co.uk/home/_site/channels/savings/savings-bonds/1yr-fixed-bond/index.html

From T&Cs

2. Accounts may be held by Trustees providing a separate Trustee Application Form has been completed which is available from any Britannia branch.

That may be an easier option than opening one at another organisation with their ID requirements.

p.s. Personally, I would not close the Firstsaver accounts but leave a small sum in them. It saves the problem of ID requirements in future if you move most of the cash elsewhere and want to move it back later.
There are also the implications of the (possible) Co-op merger on child members of Britannia but from what I can see that is the loss of free future membership of the Co-op which only costs £1 anyway (and minors cannot be members of the Co-op).

Scaredy_Cat_3

Thanks for that. I wasn't planning on closing the Britannia accounts, just moving the bulk of the money to somewhere better.

I'll look into the bonds - thanks. It's a bit annoying that Britannia themselves didn't tell me about their fixed rate bonds when I rang up to ask what the interest rate was on the firstsaver accounts last week.

homejames

I looked around & was unimpressed with the rates for childrens savings accounts, so I have set up a fixed rate savings account with barclays (in my name) and am using that for my child - okay it's not their account, but the interest is way, way better so it's the best solution IMO.

baby_boomer

Most of my son's money is in adult accounts - but no building society has ever suggested that approach. I've always had to ask.

Click on this link to go to the MoneyFacts savings search facility which has a question about age which you can use to filter out the adult accounts which are just for adults

phoebe03cat

Does this really work out better? Presumably you have to pay tax on the interest. Sorry just not too good at working this tax situation out - am a normal rate tax payer. Dd has around £7000 with the nationwide paying something pitiful...but without tax deduction of course.She's fifteen and money has accrued over time.

Lokolo

If its in your name and you are a tax payer than the interest will be taxed.

If its in the childs name, no matter where it is (be it a childs account or type adult account), it won't be taxed (if its parents money in the account, any interest over £100 is taxed though)

Mikeyorks

phoebe03cat wrote: »

Does this really work out better? Presumably you have to pay tax on the interest.

The first reality check is always .... 'do I want my child to have jurisdiction over these funds as soon as they're 16'?

The answer to that might make paying tax on the interest a little more palatable. Or use an ISA if you or the OH doesn't? Resolves both problems.

StuartGMC

How about the Post Office Growth Bond paying 3.40% gross?
You fix for 1,3 or 5 yrs. Personally we discussed with our DD (she is 11) and agreed that a 1yr fix was sensible in case inflation kicks in next Spring/Summer and interest rates rise with it.

It was straight forward to open, but, this latest issue changed some of the office handling so staff took a little longer to process it over the counter than they would have liked.

Personally I have just got details on some of the investment options such as that from Witan to read up on. But, with daughter being 11yrs old, it may be too short a timeframe now to be certain of returns being good when she is 18?