Confused re isa

bcljnk

I have been to the bank today to open a new account to keep bills separate from extra money we have left over....i also have an account in my little boys name, but i have been transfering some money into it to 'save' for anything we may need as he cant save lol......but the lady told me not to save it in my sons account as not worth it...and it classed as 'his' money and once he is 18 its his...he is only 9, she suggested an isa, didnt know much if anything about them, but did it anyway, just checked and it gives 2%...so if i dont put anymore in the isa i would get about £50 in interst from the £2500, now baring in mind i may have to use this money for things like car insurance ect was it really worth opening???????
So the kids account is closed and i now have an isa!!!!!

thenudeone

Yes -money in a child's account belongs to the child. Parents are only acting as a trustee and shouldn't really be taking the money to spend on themselves (I'm not suggesting you were doing this).
2% isn't the best rate you can find but bearing in mind that many people are only paying 3-4% (or much lower) interest on mortgages, the bank has to cover its costs so can't afford to pay much more on savings and stay in profit.
There are better rates available but not massively better.
A savings account is a good way to keep saved money separate from day to day money and avoid the temptation to spend it (if you are that sort of person).
Even with low interest rates, it's much better to keep the savings than frittering it away then possibly having to borrow at very high rates if you need money in a hurry because of car breakdown, redundancy, or whatever, so keep up the savings habit!

Was there a specific question you wanted answering?

bcljnk

Thanks...the money was mine...i just borrowed his account to look after it lol as didnt want it in the main account....my question was...baring in mind the money is to use instead of using credit cards...for car insurance/tax/breakdown of large items ect, is it really worth putting it in an isa as it wont get much interest really???

thenudeone

Well - £50 is better than nothing, and being in an ISA means you get all of it instead of just 80% of it after the tax man takes his slice.

Reaper

bcljnk wrote: »

just checked and it gives 2%

Why settled for 2%? You should have shopped around first rather than just buying it from your bank. There is a list of the best ones available in the first post here:
https://forums.moneysavingexpert.com/discussion/401374

Loughton_Monkey

As stated, the biggest mistake is saving at 2% when 3% is freely available.

Perhaps the next biggest 'mistake' might be that you seem not to be using your £5,340 annual Cash ISA allowance to make longer term savings provisions. However, that's up to you. But if you are not using the ISA to build up cash resources, then you may just as well use it for very short term savings - as outlined in your post - so that the interest is not taxed.

atush

I agree with the above post. Find a better rate, and by all means spend what you have to, but think of increasing your savings so that some 'sticks' around for a while. Life is a big long road and you will need it in t he future for yourself or your child or your retirement.

bcljnk

Thanks, i will prob shop around and change to a higher one...i didnt go into the bank with the intentions of opening and isa...like i said i knew nothing about them, and was basically jossled into closing the kids account and moving it over to an isa.
The reason i am not using it to its full amount is i do not have that kind of money....if only i had:D
Thanks for all the advice....i am hoping to save some more so will help if and when we have to dip into it.

atush

But you could have that kind of money. If you find ways to save and to earn you could be tucking away all kinds of spare change.

That is how i started saving, spare change. then it was 20 quid a month, 50 quid a month etc. It soon mounts up.

Go over to the budgeting baord and Old style boards and find out how to do it. The quickest way to saving is finding ways of reducing your costs. You'd be surpirsed how much you waste.