Halifax Kids regular saver 6%, bit of a con!

wazza24

My boys Regular saver with the Halifax just matured the other day. At first it looks great, 6% but it was only when i went to open it for another year and was told i could not lodge the first years savings into it (which would have allowed me to get 6% on that money) that i realised i had feel for a good headliner......:( over the year it actually works out at about 2.8%, disappointing Halifax come on...... anyway just thought i would put it out there, so others could make better decisions regarding there childs savings

i don't currently use my full ISA allowance so am gona just save it in there instead, unless I can find a good kids account that actually does what it says..... any ideas? :beer:

neas

I dont believe its a con lol.

Just your misunderstanding of the terms and conditions and simple maths.

If you save £500 a month and get 5% per annum the money invested over a year is about £6000 but some of the money gets 11 months interest and some gets 1 month.... it averages out to roughly equivalent to having £3000 upfront at the start of the year for interest.

so you get half of the headline rate.

But thats fair as you only invested part of it for a month and 2 months etc. etc.

Its meant to be a regular saver not an isa where you can switch your remaining balance to 6% overwise everyone would use them. Still 6% on £300 is still better than anywhere.

HappyMJ

It pays 6%pa on the daily cleared balance. You could open a normal childrens savings account earning about 2% to 3% and sweep £100 a month into the kids regular saver each month and you will earn more than keeping it the normal savings account.

opinions4u

wazza24 wrote: »

My boys Regular saver with the Halifax just matured the other day. At first it looks great, 6% but it was only when i went to open it for another year and was told i could not lodge the first years savings into it (which would have allowed me to get 6% on that money) that i realised i had feel for a good headliner......:( over the year it actually works out at about 2.8%

Did you expect them to pay you 6% interest on the money you paid in a month earlier? Or 6% on money that had been there for 5 months? Or 9 months?

Take a read of Martin's article on regular saver accounts. It will highlight that the problem is in your understanding. Don't worry, you're not the only one.

, disappointing Halifax come on...... anyway just thought i would put it out there, so others could make better decisions regarding there childs savings

Not many places paying more than 6% interest on savings.

i don't currently use my full ISA allowance so am gona just save it in there instead, unless I can find a good kids account that actually does what it says..... any ideas?

So if your ISA is paying you 3.00% interest and you pay in, say, £100 a month, how much interest do you think that would pay compared to a Kids Regular Saver paying you 6.00% AER (CLUE: It's half the amount)?

The Halifax product does exactly what it says on the tin. It pays an annual equivilent rate (that's AER) of 6.00%. It doesn't pay you a year's interest on money that has been there for less than 12 months.

Their web site is quite up front about how interest is calculated:

Kids' Regular Saver example - If you save £50 each month, you'll earn £18.97 gross (£15.18 net) interest after 12 months.

The interest is calculated on the balance of the account each month, so using the example above, the first month's balance would be £50, the second month £100 etc. and therefore the amount of interest paid will increase over the year in line with the balance of the account.

If they calculated it any other way it would be completely unfair on savers who leave their money in for longer.


Perhaps take a look at the Halifax Junior ISA. That might give you what you expect. If your own ISA is with Halifax.

wazza24

neas, its 6% on your 1st month deposit thats it after that your not getting 6% anymore. so over the year its 2.8%, not 6%, simple....;)

4u i understand the way interest works, my main complaint was the fact that they dont allow you to deposit the money from the year before back into the new account.....:)

westy22

neas, its 6% on your 1st month deposit thats it after that your not getting 6% anymore. so over the year its 2.8%, not 6%, simple....

Obviously not so simple for you:)

xylophone

If the money from the maturing account belongs to your son, you cannot deposit it in your ISA. There is nothing preventing your putting the sum you were previously crediting to the old account into your ISA and regarding your ISA as a future gift to your son but you might need to have regard to IHT considerations at that time.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10013916 might be worth a read - is your son eligible for a CTF or an JISA - these are not subject to the "£100 rule."

"The Child Trust Fund (CTF) is a long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011 only. "

"Junior ISAs are long-term, tax-free savings for children under 18 who do not have a CTF account. From 1 November 2011, your child can have a Junior ISA if they:
are under 18
live in the UK
are not entitled to a Child Trust Fund account"

opinions4u

wazza24 wrote: »

neas, its 6% on your 1st month deposit thats it after that your not getting 6% anymore. so over the year its 2.8%, not 6%, simple....

It is 6% AER though. As advertised.

4u i understand the way interest works

Ok, then I don't really understand why you would save monthly in to your ISA at, say, 3% when you could save monthly in to a Kids Regular Saver at 6%.

my main complaint was the fact that they dont allow you to deposit the money from the year before back into the new account.....:)

The account does what it says it will do. It's for saving regularly for the year. At the end of that year it becomes an easy access account allowing you to decide what to with the funds. It never said you could open a new one for the accrued lump sum.

But you could open a Halifax Junior ISA and earn 6% interest on that lump sum (3% if you don't have your own cash ISA with Halifax).

You could bung the funds in to a Kids Fixed Saver account paying 4%+.

You take take the funds to a competitor (Northern Rock for example) and take advantage of their 3% rate for kids.

Or you could complain that the account has done exactly what it said it would do. Nothing more. Nothing less.

Trentenders

"I think it should pay 6% on the balance that isn't saved for the full year". Randoms ;p

evenasus

Someone asked recently, if they would receive 3% on 31st March on an amount of money they had only put in the account in February.

I'm never ceased to be amazed, at the lack of financial understanding some people have.

evenasus

wazza24 wrote: »

4u i understand the way interest works

You obviously don't.