Help with a babies savings account

ICY_2

I have had a look around and cant seem to come up with the answer to this.

Basically I want an account for our new born, gonna be saving at least £100 per month with extras on birthdays/christmas ect

I want a bank account that cant be withdrawn from until LO turns 18 (this is hopefully going to be uni funds if thewre will ever be any spaces left)

Internet access to the account would be a great added benefit but not essential.

But I do want the flexibility to put more in each month have seen some accounts where I can only deposit a max of £100, this is no use to me, I dont want to be having loads of different accounts because they are all restricted, the only trust accounts are CTF that I have found, again this is not what I wanted due to being restricted how much money can be saved what we need is a simple trust account where we run the account until 18th birthday then ownership passes over to LO, with no withdrawls allowed until then to remove all temptation to use any of the money.

Hope someone can help, there are just so many accounts out there and my head is all fuzzy now after trying to sort this out.
:mad:

opinions4u

Don't trust any financial organisation to pay a competitive rate on "captive funds" in a deposit account for a full 18 years. It's basically asking for them to pay a poor return sooner or later.

I'd suggest that you see an IFA for the £100 a month side of things (find one at www.unbiased.co.uk) and put any extras in to the Northern Rock 3% kids account. Retain parental access to this and review that holding at least annually to ensure the best rate of interest is still being earned - perhaps with a view to topping up any investment set up by the IFA.

There does appear to be an account that meets your requirements though. Try this link to Chorley Building Society. 2.90% is the current rate. I can't see any rate guarantee though - you could have a huge sum in there and they could stop paying interest and you've no way of getting it out until the 18th birthday.

xrjtg

opinions4u makes the implicit point that it might be sensible to look beyond savings accounts over an 18 year term. It's not quite clear from your initial post—is this something you'd considered, or were you definitely looking for a savings account?

You might not want to dismiss the CTF out of hand: with any sensible rate of return the income on these savings is going to start to be taxed as part of your income after the first three of four years if you're making payments of £100 a month.

http://www.moneysavingexpert.com/savings/child-savings-tax-free#maximising

I can't provide any advice about forming a trust, but opening accounts in your child's name and then operating them yourself is likely to provide sufficient protection for 10 years or so at least without any legal manoeuvres, just because of the difficulty a young child would have dealing with a financial institution.

vaporate

This is just my opinion but I would only make it available to the kid when he or she turns 25.

At 18 it will get wasted on fashion tack, console games etc.

At 25 they should have more respect for the money and use it wisely.

That's the theory anyway.

ICY_2

I am not too fussy about the interest rate ect I am more concerned about the money we are saving for her is safe in an account that we can monitor. I also want to just be able to give her grandparents the account details allowing them to contribute to the savings as and when they want, it really has to a restriscted withdrawl account for 18 years.

The Chorley account isnt much good to us as they limit to £1200 per year in deposits, same for CTFs, as I said in OP I dont want to have loads of accounts open for her because of restricted deposit allowances, that is taking our freedom away to choose how much we save for her, also due to LO only being 3 weeks old the only amount we will receive from CTF is £50

@vaporate I hear what you are saying but this is a university education fund, wont be much use for that if shes gotta wait until she gets to 25

Reaper

A couple of things to mention:

1) There is a nasty tax rule that says even if a child account has been set up in their own name if the parents contribute to it and it makes more than £100 in interest then then the whole lot is tax as if it is part of the parents income. So by all means set one up that grandparents can contribute to but don't put any money in yourself so it stays tax free (up to the normal annual allowances). If you want to contribute put it in the CTF instead which is exempt from the rule.

2) As opinions4u touched on a savings account is not necessarily the best choice for the long term. Currently most savings accounts do not keep up with inflation plus they have a bad habbit of offering great rates which start declining after a year so you will have to monitor it and switch at regular intervals. Personally I used investments for my child with the parents as trustees (the ones who operate the account on their behalf) but the trustees can just as easily be the grandparents or both. I can tell you more if you decide to go down that route.

ICY_2

It wouldnt be a problem with the grandparents putting money in the account instead of us, also gonna get CHB paid into the account too, reducing the amount we put into the account as parents, bonna be opening a CTF anyway for the whopping amount of £50 that LO is entitled too so will use that for actual cash we are putting in.

How much would need to be in an account to attract £100 a year in interest just out of interest

xrjtg

At a pessimistic 3% rate of interest, £3300.

Don't think of the CTF as "taking our freedom away to choose how much we save for her"; that simply isn't true. It just means that the best arrangement for you, as for many people, might involve opening multiple accounts.