Saving for children - best approach

Savingnewbie22

Hi there,

Just after a bit of advice regarding the best way to save for my children, aged 3 and 5....

I currently have a children's saving account open for them each (about £4k each), one with Halifax and one with Nationwide, that offered decent savings rates to start with, but they have now reverted to 0.5%. I am a 'bare trustee' I believe on these accounts. After looking at other childrens savings accounts, there interest rates are nowhere near as good as standard savings accounts for adults- I'm not sure why.

Would there be any issue with opening, say a 1-year fixed saving account in my own name, and transferring this money across to get a higher interest rate for them? I wasn't sure whether once money is in a 'child's account' it has to stay in that type of account. I have about £8k of savings myself and are a basic rate tax payer.

I wasn't interested in opening an ISA, as I'd prefer them to get the money when they are a bit older than 18.

Any advice and other suggestions welcome...

Many thanks

Keep_pedalling

For young children I would be looking at investing rather than cash accounts. A S&S JISA would be my choice.

eskbanker

Savingnewbie22 said:

I currently have a children's saving account open for them each (about £4k each), one with Halifax and one with Nationwide, that offered decent savings rates to start with, but they have now reverted to 0.5%. I am a 'bare trustee' I believe on these accounts. After looking at other childrens savings accounts, there interest rates are nowhere near as good as standard savings accounts for adults- I'm not sure why.

Would there be any issue with opening, say a 1-year fixed saving account in my own name, and transferring this money across to get a higher interest rate for them? I wasn't sure whether once money is in a 'child's account' it has to stay in that type of account. I have about £8k of savings myself and are a basic rate tax payer.

This subject often generates heated debate, but the money currently in the children's names needs to stay that way, as it's legally theirs, so shouldn't be moved into your name.

Exodi

You generally can't move the money from their account back to your own (except in very specific circumstances that don't apply here).

You could of course save future money for them in your own name.

This type of question comes up fairly regularly on here.

Exodi

eskbanker said:

Savingnewbie22 said:

I currently have a children's saving account open for them each (about £4k each), one with Halifax and one with Nationwide, that offered decent savings rates to start with, but they have now reverted to 0.5%. I am a 'bare trustee' I believe on these accounts. After looking at other childrens savings accounts, there interest rates are nowhere near as good as standard savings accounts for adults- I'm not sure why.

Would there be any issue with opening, say a 1-year fixed saving account in my own name, and transferring this money across to get a higher interest rate for them? I wasn't sure whether once money is in a 'child's account' it has to stay in that type of account. I have about £8k of savings myself and are a basic rate tax payer.

This subject often generates heated debate, but the money currently in the children's names needs to stay that way, as it's legally theirs, so shouldn't be moved into your name.

Yes, and on this note - please oh please can this thread not be derailed into emotive arguments about theft... we get it.

xylophone

https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

Savingnewbie22

Thanks for the feedback. I'll look for the best possible children's account then to transfer into. 

With hindsight, I wish I'd just set up an account in my own name, that would have given more flexibility and better savings rates. I can't see the incentive to put money in accounts aimed at children if the rates are lower than standard accounts, and you are not close to any tax thresholds yourself. 

Thanks again.

wmb194

One way to achieve roughly what you want i.e. low risk, c.5% fixed income returns but keep the funds in their names with you as the bare trustee but not lock the money away in a JISA would be to open a Children's stockbrokers GIA and buy gilts and/or money market funds. There may be others but I know that AJ Bell offers one.

Historically it's actually very unusual for adult accounts to pay better than children's so perhaps in time things will revert. In the past the threads were about whether it was okay for adults to place their money in children's accounts...

https://www.ajbell.co.uk/investing-for-children/dealing-accounts-for-children