MSE News: Banks shun junior Isa launch

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Banks shun junior Isa launch


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  • This is just another great scheme conjured up by people who have no clue on what is going on in the real world.

    How many people in the current climate have a spare 3,600 per child to pay in...

    Oh I know, the wealthy and this just provides ANOTHER tax haven for the wealthy to reduce their annual tax bill, of course its for the children mr tax man...
  • robert_h_2
    robert_h_2 Posts: 29 Forumite
    edited 27 October 2011 at 9:33PM
    Hmm, as someone who was waiting for this to launch so that we could start investing for daughter no 2, I must say I'm not impressed by the apparent lack of interest displayed by the banks.

    There are other providers out there e.g. https://www.fidelity.co.uk/investor/junior-isa/default.page?smid=gr5ja1it
    but these are going to be stocks & shares not cash JISA's.

    I think we can better the Nationwide 3% offering with our existing regular saver, but will have to do the sums to see which works out best over the next couple of years (when the bonus Nationwide are offering expires).
  • tagq2
    tagq2 Posts: 382 Forumite
    robert_h wrote: »
    I'm not impressed by the apparent lack of interest displayed by the banks.

    What exactly is in it for the bank to offer, say, 3% on a Junior ISA?

    Building societies need 50% real saver capital to lend out. But banks mostly want you to re-borrow money via them and/or lazily/ignorantly hold lots of money in their negligible interest accounts. When's a two year old going to do that?
  • chesky369
    chesky369 Posts: 2,590 Forumite
    On the application material I received from Fidelity, it seems they do have a cash ISA also - it's called the MoneyBuilder Cash ISA. However, most recommendations are for stocks and shares ISAs for children. I shall only be doing a cash one for my eldest granddaughter who is already 16 so it's not worth doing a S&S ISA for her, as they are better over the long term.
  • chesky369
    chesky369 Posts: 2,590 Forumite
    This is just another great scheme conjured up by people who have no clue on what is going on in the real world.

    How many people in the current climate have a spare 3,600 per child to pay in...

    Oh I know, the wealthy and this just provides ANOTHER tax haven for the wealthy to reduce their annual tax bill, of course its for the children mr tax man...


    Well, I'm not wealthy but I have managed to save over the years and I want to help my grandchildren get into the habit of saving also. It's not compulsory to put in the total amount of £3,600 so you could open one with a much smaller amount, which would allow other members of the family to contribute at birthdays, christmas, etc.

    I think if more people had been encouraged to get into saving when young, instead of spend, spend, spend, then the country wouldn't be in half the mess it is today.
  • JimmyTheWig
    JimmyTheWig Posts: 12,199
    Name Dropper First Post Combo Breaker First Anniversary
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    chesky369 wrote: »
    On the application material I received from Fidelity, it seems they do have a cash ISA also - it's called the MoneyBuilder Cash ISA. However, most recommendations are for stocks and shares ISAs for children. I shall only be doing a cash one for my eldest granddaughter who is already 16 so it's not worth doing a S&S ISA for her, as they are better over the long term.
    I agree with your logic.
    If the child is likely to need the money in the next 5 years or so then a cash ISA is best.
    If it's for a newborn / toddler then I'd go with the stocks and shares option.

    Remember, chesky, that a 16 year old can have an adult cash ISA - check if the rates are better.


    P.S. On that note, MSE Guy, I wouldn't call someone aged 16-18 a "kid".
  • opinions4u
    opinions4u Posts: 19,411 Forumite
    chesky369 wrote: »
    I think if more people had been encouraged to get into saving when young, instead of spend, spend, spend, then the country wouldn't be in half the mess it is today.
    I agree with your sentiment.

    What I don't get is why a Junior ISA paying 3% is going to be better than a, say, Northern Rock account for kids paying 3% where you can sign an R85.

    While the £100 rule is archaic, allowing the wealthy to evade tax by sticking £60k+ in the name of each child seems a ridiculous swing in the other direction.
  • tagq2
    tagq2 Posts: 382 Forumite
    chesky369 wrote:
    I think if more people had been encouraged to get into saving when young, instead of spend, spend, spend, then the country wouldn't be in half the mess it is today.
    Straight saving today is very likely to result in you losing money - there's certainly no Junior Cash ISA which exceeds inflation. Losing some money is certainly better than wasting all of it, but others might argue that it's essential to invest instead, whether in shares/funds/bonds or in property or other valuables. Never in recent history has a responsible but conservative approach been so weakly rewarded.
    opinions4u wrote:
    What I don't get is why a Junior ISA paying 3% is going to be better than a, say, Northern Rock account for kids paying 3% where you can sign an R85.
    Because "When the account holder turns 18, their Junior ISA(s) should become ‘adult’ ISA(s)." That's a huge potential head start on capital in an ISA for taxpaying adulthood.

    (Just noticed - HL's Vantage S&S ISA appears to be about to have a Junior form, requiring only £500 initial investment.)
  • Mandelbrot
    Mandelbrot Posts: 9,139
    Rampant Recycler
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    tagq2 wrote: »
    Because "When the account holder turns 18, their Junior ISA(s) should become ‘adult’ ISA(s)." That's a huge potential head start on capital in an ISA for taxpaying adulthood.

    Even more of a head start, when they are seemingly going to be allowed to contribute to both a Junior ISA and an 'adult' ISA at the same time, with both maximum contribution levels applying.
    Having a Junior ISA would not affect any individual’s entitlement to an ‘adult’ ISA. Junior ISA account holders would therefore be able to open ‘adult’ cash ISAs from the age of 16, and Junior ISA contributions would not impact upon the operation of any ‘adult’ ISA subscription limit.
  • chesky369
    chesky369 Posts: 2,590 Forumite
    It's a pity the original MSE article only discusses the fact that the banks aren't producing junior ISA products yet but doesn't take the opportunity to list and review the products that ARE available - I discovered a link through the BBC money box website which does list a few products (posted on another thread on this subject) but it isn't by any means complete. I would have very much welcomed this in my decision-making process.
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