CONFUSED! Kids Fixed Saver or ISA?

mayzee_2

My baby daughter has been given cash by family and friends and currently has £1150.00. I was looking to put most of it in a 'Kids fixed saver' with a fixed term for 5 years to get a good interest rate then open a regular saver (so we can put money in whenever we want) from which we can transfer money into the Kids fixed saver/ ISA at the end of the term and then fix it again. We would be happy to pay in £10 a month too if necessary. The problem is I am not good with numbers and the am finding all the jargon and interest rates confusing! I have also noticed that some of the bank or building societies which seem to be on the 'top ten' lists do not exist in our area and many offer branch only banking so are no good. Another hurdle!

So far we are considering the HALIFAX kids regular saver which seems to be the best of it's kind offering 6.00% (for one year) alongside their kids fixed saver which offers a rate of 4% if fixing the term for 5 years.

Can someone please tell me if I am on the right track or if I should maybe just open an ISA account in mine or my husbands name. I really just want to know what account will offer a good rate even after any fixed rates end.

19lottie82

One thing to remember is that wih a childs ISA, is that the money is automatically tranferred in to their name as soon as they turn 18., so they can withdraw and spend all of it if they want without your permission.

This would definitely put me off investing in one, as there is no way of telling if your DD will be mature enough to handle the responsibility of such a large sun of cash on her 18th birthday - I know I wasn't at that age.

If it was me I'd want to retain access to the cash until my child needed it for a certain event such as a house deposit, first car, wedding, uni etc...

xylophone

The money that family and friends have given to your daughter is hers absolutely - you can hold it in bare trust for her but she has the right to access at 18 or 16 in Scotland. See http://www.hmrc.gov.uk/tdsi/children.htm

You are not confined to accounts specially for children - you can open any account where the "re" format is acceptable - ask the provider.

It makes life easier if money given by parents is kept separate from that given by other people because of the "£100 rule" unless in a tax exempt product like the JISA to which it doesn't apply.

See http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10013916

JISA details are here http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/SavingsAndInvestments/ISAsandJuniorISAs/DG_199672

The Halifax offers a good rate on the cash JISA if the parent registered contact has an adult ISA with them.

If you are planning to save for your child but don't wish her to have access at 18, you might prefer to regard your own ISA as "earmarked" for your child so that you can hand over your money at a time of your choosing.