Regular saver or lump sum account?

reformedspender

I have a savings account for my son (who is now seven), that I have been putting into since he was born. It has £3,500 in it but is in an awful TSB account earning 0.49%.

I have checked out Martin's guides and the Halifax's 6 per cent looks tempting, but I can only put in a maximum of £100 per month.

My question is, is it better to put £100 per month from his savings in the Halifax at 6 per cent and the rest in an account earning 3 per cent OR is it better to put the lot in an account paying 3 per cent from the get go.

eskbanker

Put it all in a 3% account to start with and then drip-feed £100 per month into the 6% regular saver!

reformedspender

Thanks. I'm not usually a complete numpty, but somehow I can't get my head around this one!

xylophone

If a parent provided the capital, be careful of the £100 rule if saving outside CTF/JISA.

This means parents (and step-parents) can gift their children as much money as they like, but the child can still earn only up to £100 in interest in a year tax-free from any money given to them by each parent — a total of £200 in a tax year.
If it goes over this limit, the whole amount — not just the interest earned over the £100 limit — is taxed at each parent’s normal rate.



http://www.halifax.co.uk/savings/accounts/junior-savers/

downhillfast

reformedspender wrote: »

I have a savings account for my son (who is now seven), that I have been putting into since he was born. It has £3,500 in it but is in an awful TSB account earning 0.49%.

I have checked out Martin's guides and the Halifax's 6 per cent looks tempting, but I can only put in a maximum of £100 per month.

My question is, is it better to put £100 per month from his savings in the Halifax at 6 per cent and the rest in an account earning 3 per cent OR is it better to put the lot in an account paying 3 per cent from the get go.

I had this exact same question a month ago...!

After having asked on here I decided to go the route of opening both accounts thinking I was going to have to explain it all in branch etc etc but it seems that opening both accounts at the same time is all very normal and what a lot of people do!

The way it works is that you have a standing order set up monthly from an external account (ie your account - the 3% child account does not have standing order capabilites obviously) to deposit between £10-100 a month to the 6% account. At the end of the 12 month term this account automatically empties itself into the 3% account and the 6% account starts again from scratch. The only downside is that theses accounts are only accessible in-branch so if you need to withdraw from the 3% account each month to subsidise your standing order payments it will involve a trip to the bank.

ColdIron

Have a look at the Regular Savings Calculator to see what it's worth, choose the drip feed option
http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#calculator