Savings for my daughter about to turn 18

richard_r_2

My daughter has £3,000 currently in a Halifax ISA who is about to turn 18. She has been receiving interest of 6% but that will change when she turns 18. Should I
a) put it in another ISA probably earning 1-2%
b) normal savings acc (won't be paying tax on any interest earned
c) use it for uni (if she goes) and reduce the loan amount she will be borrowing
Any advice gratefully received

jimjames

Definitely not c)

http://www.moneysavingexpert.com/students/should-i-get-student-loan

If she can qualify for a current account then she can get 5% which beats any ISA. She may not be able to depending on credit checks.

Either way just choose the best paying account, an ISA isn't always the best rate especially for a non taxpayer.

colsten

Whatever you end up doing, it's something she needs to agree with as she is an adult at 18 and the only one who can open accounts in her name.

Halifax will put the money into an account, probably ISA, in your daughter's name to start with - check the T&Cs for details.

xylophone

Should I

You mean "Should your daughter"
https://www.gov.uk/junior-individual-savings-accounts/managing-an-account

"Children older than 16
If your child is 16 or older they can:

become the registered contact for their Junior ISAs
open a regular ISA
When your child turns 18 they can take out any money in their Junior ISAs.

Junior ISAs automatically turn into a regular ISA when the child turns 18."

richard_r_2

Thanks For the advice. I looked into current accounts which I hadn't considered but a certain amount needs to be credited into the account every month for the interest rate to apply... and yes it is "she" not "I" that will need to maintain the account going forward. I think the best way forward seems to be normal savings accounts sonce she is unlikely to be paying tax on the interest earned for a while...

bowlhead99

You are right that a high interest current account depends on her depositing each month. However, if she has £3000 spare this is not a problem as she can move out some minimal amount (£500 or £750 or whatever the T&Cs say) into her existing Halifax account and then 'deposit' it back into the high interest current account at the other bank to meet the criteria.

You may find however that if she goes off to Uni without a regular income the £3k dwindles and she doesn't have the spare £750 to rotate around accounts (or loses the inclination once there is not a lot of cash and therefore not a lot of interest to be earned). Plus, without a credit history or a job she may not be the type of customer the banks want to give one of these added value accounts to, yet.

Also, if she does go to uni, banks have dedicated student accounts that come with useful free overdraft facilities and often other perks (railcards, ability to apply for student credit cards etc). They don't want to offer you all these freebies if you are also running more current accounts with other banks because they see the perks as an investment to hopefully get your future business. So for a student, the trick of bouncing money in and out of lots of high interest 'regular adult' current accounts is something that is much harder to pull off and it's likely a typical 18 year old living with the challenges of being a uni student for the first time is not going to want the hassle.

So, as you say, a 'normal' savings account or adult ISA might be a perfectly reasonable approach, even if the interest rate is less than half of what's available on the top current account that she may or may not qualify for.

PeacefulWaters

Ask your daughter to research it.

Then post her suggestions on here for honest appraisal.

richard_r_2

Thanks you all for your comments. I asked my daughter to research it herself but she is not interested. The comments re the current account and dipping into the balance are so valid which I had not considered. I think I will get my daughter to leave it for a couple of months and she if the interest rates improve.

Voyager2002

richard_r wrote: »

Thanks you all for your comments. I asked my daughter to research it herself but she is not interested. The comments re the current account and dipping into the balance are so valid which I had not considered. I think I will get my daughter to leave it for a couple of months and she if the interest rates improve.

I cannot imagine that the interest rate will improve in the near future.

She could maximise her return by opening a TSB Classic Plus account (which pays 5 per cent) and completing a form R85 so that no tax is deducted. A condition is that she pays in 500 per month (and that the balance remains about 2,000) but using Faster Payments it is very easy to take out 500 and then pay it back in again within a few minutes.

If this process sounds boring, ask her whether 150 pounds a year for almost nothing is interesting...

PeacefulWaters

richard_r wrote: »

I asked my daughter to research it herself but she is not interested.

The lazy mare.

Tell her you'll reduce any allowances you pay her by the amount of any interest that she's missing out on.

She clearly doesn't value money.

colsten

PeacefulWaters wrote: »

She clearly doesn't value money.

Sounds very much like it, though has she been taught to value money?