Child savings advice

Stevo_safc

Hi

We've currently got a Kid's Monthly Saver with Halifax for our 2 year old that we've had since his birth.

The account has a £100 deposit limit per month with a 2.5% interest rate. After each year the money from the Monthly Saver gets transferred into a Kids Saver which pays 1%. The second year anniversary is on the 14th September so the Kids Saver will have £2400 plus interest accrued at that point.

Does anyone have any advice on some better higher paying accounts to continue saving for our child?

Thanks

ZeroSum

Virgin have one for 2.75% that's a 30 day access (however going by your username, the Sunderland branch won't allow you to open one as they don't have the 'specialist' staff)

Newcastle BS pay 2.5% instant access, but there's a £200 a month & £500 deposit limit, so will take 10 months to move your £2400 across

refluxer

You can definitely do better than 1% with the Halifax - check out the top tables on the MSE Children's Savings page...

https://www.moneysavingexpert.com/savings/child-savings-tax-free/

... although your son isn't old enough for some of those accounts. For larger sums, Barclays pay 1.5% on balances up to £10k and Nationwide"s Future Saver pays 2% but you're limited to one withdrawl per account year.

Does your son have a Junior ISA ? Junior Cash ISAs pay more than many children's savings accounts but money can only be accessed by the child and only when they reach the age of 18.

Stevo_safc

ZeroSum said:

Virgin have one for 2.75% that's a 30 day access (however going by your username, the Sunderland branch won't allow you to open one as they don't have the 'specialist' staff)

Newcastle BS pay 2.5% instant access, but there's a £200 a month & £500 deposit limit, so will take 10 months to move your £2400 across

Thanks for the info, do you know if Washington, Durham or Hartlepool have specialist staff?

Stevo_safc

refluxer said:

You can definitely do better than 1% with the Halifax - check out the top tables on the MSE Children's Savings page...

https://www.moneysavingexpert.com/savings/child-savings-tax-free/

... although your son isn't old enough for some of those accounts. For larger sums, Barclays pay 1.5% on balances up to £10k and Nationwide"s Future Saver pays 2% but you're limited to one withdrawl per account year.

Does your son have a Junior ISA ? Junior Cash ISAs pay more than many children's savings accounts but money can only be accessed by the child and only when they reach the age of 18.

No he doesn't have Junior ISA. Would the money be locked into the ISA until he's 18, and only able to be transferred across to other Junior ISA products?

ZeroSum

Stevo_safc said:

ZeroSum said:

Virgin have one for 2.75% that's a 30 day access (however going by your username, the Sunderland branch won't allow you to open one as they don't have the 'specialist' staff)

Newcastle BS pay 2.5% instant access, but there's a £200 a month & £500 deposit limit, so will take 10 months to move your £2400 across

Thanks for the info, do you know if Washington, Durham or Hartlepool have specialist staff?

No idea. We went in & asked about it & got told the person was off for a couple of weeks & they'd give a ring. That was 2 months ago, so just went with the Newcastle instead. Virgins customer service aren't very good. If you popped in you might get lucky

refluxer

Stevo_safc said:

refluxer said:

You can definitely do better than 1% with the Halifax - check out the top tables on the MSE Children's Savings page...

https://www.moneysavingexpert.com/savings/child-savings-tax-free/

... although your son isn't old enough for some of those accounts. For larger sums, Barclays pay 1.5% on balances up to £10k and Nationwide"s Future Saver pays 2% but you're limited to one withdrawl per account year.

Does your son have a Junior ISA ? Junior Cash ISAs pay more than many children's savings accounts but money can only be accessed by the child and only when they reach the age of 18.

No he doesn't have Junior ISA. Would the money be locked into the ISA until he's 18, and only able to be transferred across to other Junior ISA products?

Yes, that's right. The MSE Junior Cash ISA guide is here .. https://www.moneysavingexpert.com/savings/junior-isa/

Stevo_safc

@ZeroSum @refluxer thanks for all your help, would you happen to know anything about the £100 interest rule on child savings just I'm struggling to understand it. I guess its an annual tax on interest over the £100 mark on savings.

Does this only apply if I myself am earning a lot of interest from my own savings or is it independent of my own savings? I believe its to stop people using child savings accounts to circumvent paying tax on their own savings?

MX5huggy

Yes if they earn more than £100 of interest on money their parents haven given them then that interest is considered to be earned by the parent. 

https://www.gov.uk/savings-for-children

Money from other sources and in Junior ISA is excluded. 

I’ve decided that child saving is an overrated savings area, it’s a nice idea but if you do it, you end up with a complicated situation of the money being theirs just when they might not have the skills to handle it in the way you expect. Or you consider it yours and end up in a pickle trying to spend it for them. Unless you are using all your own ISA allowance every year (£20000) I would focus on that for a Stocks and Shares ISA if saving for 10 years plus. 

Exodi

MX5huggy said:

I’ve decided that child saving is an overrated savings area, it’s a nice idea but if you do it, you end up with a complicated situation of the money being theirs just when they might not have the skills to handle it in the way you expect. Or you consider it yours and end up in a pickle trying to spend it for them. Unless you are using all your own ISA allowance every year (£20000) I would focus on that for a Stocks and Shares ISA if saving for 10 years plus. 

I completely agree with this 100% and think this should pretty much be standard advice on this forum.

Judge as you all like, but when I have children I intend to just make a specific all-world investment in my S&S ISA which I'd consider theirs. Far too much drama to hear of parents having an emergency (car/boiler breaking, roof leaking, etc), not having the funds to rectify it, then discovering that they can't touch the money they deposited 10 minutes ago because their 18 month old legally owns it.

They then typically come to this forum to ask for advice and get lambasted for attempting to 'steal their kids money' - even though it's obvious most parents would replace it.

Then you have the later situation MX5huggy touches upon, wherein you expect the child to turn 18 and put the money towards driving lessons or to help save for a deposit on a house - where in reality it ends up getting spent on endless takeaways, skins on the current 'game of the month', energy drinks and nights out every weekend. Again, a situation you would have limited control over. At least if you always retain ownership of the money, you can control what it gets spent on... 18 year olds aren't renowned for their financial responsibility...

Albermarle

Or a mixture of the two . Save/invest the majority in your own name, but have some in the childs name as well.
If they blow it all at 18, they actually learn a valuable lesson I.e once it is spent it is gone, but by having the majority in your own name you can limit the damage.

Personally I never saved/invested specifically for the children, and just concentrated on my own finances.