Savings Account for my baby daughter

RosieMacDoo

Hi all

Can anyone offer me some advice please? I'm new to the savings thing - am much more used to dealing with debt! Have had a look through the stickies and recent threads but am struggling to find out what I need to know.....

My baby daughter is 1 tomorrow and since she's been born, we've been looking to open a savings account to put money into for her on an as-and-when basis e.g. when she gets money from family for xmas, birthdays, easter etc

I don't want to use her CTF as I don't agree with her having control of a big chunk of money when she turns 18 - I'd like to be able to have a say in what she can use the money for when she's old enough (eg education fees, towards first home or whatever) and not just let her fritter it away as I know I would have done at 18!! So her CTF will just be getting her government vouchers and that's it.

Also we're quite cautious so a bit nervous about doing the whole investing in stocks & shares thing so would rather stick to a savings account.

Can anyone give any guidance or recommendations as to where to go next? Would we be able to open a savings account on her behalf in her name and still retain control over what she can do with the money when she hits 18? Or is it a case of opening a savings account for her money but in our own names? Will that affect the interest rate really badly? Can anyone recommend any specific accounts?

Thanks

Rosie x

ryan07

what is the age of your baby daughter? i think a minimum age is reqd. for making a savings bank account.. isnt it?

martinman3

Quite a few parents posting on the forum have mentioned their dislike of their children gaining access to the contents of accounts at the age of 18.

Recently, there have also been posts by other relatives, aunts/uncles, of children concerning accounts which contain money given to the children. In one case there was the likelyhood of the parent spending the childs money for their own use and the child wanted to freeze the account to stop this from happening but could not as the parent, as trustee, had control.

A Child Trust Fund is designed to ensure that the child's money is always protected.

Having said that, what you require is a joint account in both your name and the child's name. I know that the rates are bad but NS&I allow certificates to be held like this. You can add the childs name to an existing account at some building societies to create a joint account (and banks probably too) but not for ISAs. If you can do that, they can tax the portions of interest separately(fill in R85 for child). Unfortunately, childrens accounts have higher rates, in general, than equivalent adult accounts. There may be fixed rate bonds which allow joint holdings with children, Cheshire BS may be one. Very often the websites don't tell you until you download the application form.

Speculator

here are some accounts to consider..

http://www.moneyfacts.co.uk/savings/bestbuys/childrens-savings-accounts.aspx

Mikeyorks

martinman3 wrote: »

Quite a few parents posting on the forum have mentioned their dislike of their children gaining access to the contents of accounts at the age of 18.

Recently, there have also been posts by other relatives, aunts/uncles, of children concerning accounts which contain money given to the children.

The man who owns this site also subscribes to the view! Extract from Martins article on Child Trust Funds (link above) :

Is it worth adding to it?

On the surface this is a tax-efficient scheme, so it's a good idea. Yet it has two major drawbacks.

• The money goes direct to your child. Babes in arms now can grow to be rebellious 18 year olds. The CTF goes straight to them. Your savings for their college fund may be spent in a day on a Playstation, world trip or some darker purpose. It is their money, you can't stop them. Do consider whether you want your child at 18 to have complete autonomy over all this.

.... extremely sensible caution from a man with (allegedly) no children. Having had one who blew £10k + a proportion of Grant in his first few months at Uni, despite appearing extraordinarily sensible immediately before departure ...... the OP is quite right to maintain jurisdiction over the money, until she decides the time is right to either relinquish that ... or dole the money out (as I should have done ... and had to out of my own funds, for the rest of the 3 years).

martinman3

Personally, I don't like CTFs because you can't access the money at all until 18.

If they were created as Gordon Brown intended so that children in the poorest families would have savings that irresponsible parents could not steal from them to buy drink, drugs or cigarettes then they probably work but the majority of families are not like that.

I believe Mr Brown's intention was for them to be a method for saving for university fees and thus allowing children from even the poorest families to get a university education, assuming that money is added to it of course. If that really was the intention, they should have only allowed the contents to be used for that purpose. When first suggested the only type available was to be the stocks and shares CTF, but the banks/building societies forced the government to allow cash CTFs and then along came student loans and the grand plan was compromised.

Mikeyorks

RosieMacDoo wrote: »

Would we be able to open a savings account on her behalf in her name and still retain control over what she can do with the money when she hits 18? Or is it a case of opening a savings account for her money but in our own names? Will that affect the interest rate really badly?

If you open in her name ... then most institutions insist it cuts across to her around 16 years. If you open it 'joint' with her (actually ... pretty sure you can't do that? You can open it 'in re daughtername' .. but that's not joint .. it's 'custodian') .... you would have to ensure it's both signatures to access funds .. otherwise she could empty it.

Open an account in your name .. if you're not a taxpayer then file an R85 in order you get interest gross. Better still (picking up on your OP re being more used to debt?) ...if you dont use ISAs .... open an 'easy access' one in your name. That way you don't have to worry about the tax side of it .. as they're tax free.

That does stop you contributing to an ISA in your own right. But as the limit is £3600 per year from April - just add your own funds alongside and keep a note of the division of funds (and add the interest 'pro rata')?

Worth reading this .. if you havent :

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

(in particular the 'Whose money is it anyway? .. towards the bottom of the article)