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    • freaksaver
    • By freaksaver 6th Oct 17, 9:05 PM
    • 85Posts
    • 4Thanks
    Advice re Child Savings
    • #1
    • 6th Oct 17, 9:05 PM
    Advice re Child Savings 6th Oct 17 at 9:05 PM
    Hi All

    I have been trying to get my head around this for a while and sadly have had to resort to asking a question as I just dont understand it!

    Here is the situation..

    My son has a YBS savings account with an interest rate of 0.15%
    I have been putting 50 in each month for a few years.

    He has 1800 in it now and I have decided to move it with him to get a better rate.

    We are moving the 1800 to Santander Junior 123 account with a 3% daily.

    For the ongoing 50 per month we are setting up a Halifax Junior Account which pays 4% interest. This account can take up to 100 per month therefore we are going to transfer 50 from the 1800 in the Santander account each month to maximise what we can put into Halifax.

    Does this make financial sense? I is is it better to get 4% on the 100 per month and 3% on a reducing balance over the next 12 months or to keep the 50 in the 3% account to keep the balance as high as it can be as 3% on a higher amount is higher than 4% on a low amount isnt it!!!

    Am really confused, not great with numbers are the best of times.

    Any help at all would be greatly appreciated.

Page 1
    • Alexland
    • By Alexland 6th Oct 17, 10:55 PM
    • 2,592 Posts
    • 1,971 Thanks
    • #2
    • 6th Oct 17, 10:55 PM
    • #2
    • 6th Oct 17, 10:55 PM
    Whether you get 3% or 4% it is a massive improvement on 0.15%. You need around 3% to break even on inflation as so far your value has been erroded.

    Santander 123 Mini is a very good child current account and a good place to put up to 2k for a nearly 3% return. So the savings will retain their value in relation to the economy.

    As you say the Halifax kids regular saver pays a better 4% interest so yes filling it with 100 per month (even if 50 comes from the Santander 3% account) will give a better return. It is still only a 1% above inflation return so the real gain is around 6 (of the max 24 interest) per year.

    The interest on both accounts is calculated daily so you want the highest amount of money possible in the 4% account with any leftovers in the nearly 3% account.

    Do you have an adult bank account that offers a 5% regular saver on up to either 200 to 250 per month? These savers are available with some Santander, M&S, Nationwide and HSBC accounts. If so have you considered saving in your name to get a better return? You would need to keep the interest within your personal allowance and it could be liable for inheritance tax or go to someone else if you die young.

    If the child is still young have you considered putting some of the money in a stocks and shares Junior ISA for a potentially better return with less fiddling around?

    Last edited by Alexland; 06-10-2017 at 11:38 PM.
    • Eco Miser
    • By Eco Miser 7th Oct 17, 12:59 PM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    • #3
    • 7th Oct 17, 12:59 PM
    • #3
    • 7th Oct 17, 12:59 PM
    is it better to get 4% on the 100 per month and 3% on a reducing balance over the next 12 months or to keep the 50 in the 3% account to keep the balance as high as it can be as 3% on a higher amount is higher than 4% on a low amount isnt it!!!
    Originally posted by freaksaver
    It's true that 3% on a higher amount is higher than 4% on a low amount, but 4% on a high amount is even better, and every time you move 50 from 3% to 4% you get an extra 1% (AER) on that 50. That's about 0.14p a day, which doesn't sound much (it's only 50p a year), but it's still worth having, and you're doing it every month, so that's about 3.50 extra a year you get by moving it.
    Eco Miser
    Saving money for well over half a century
    • Flobberchops
    • By Flobberchops 7th Oct 17, 5:19 PM
    • 747 Posts
    • 535 Thanks
    • #4
    • 7th Oct 17, 5:19 PM
    • #4
    • 7th Oct 17, 5:19 PM
    Absolutely, go for the best rates preferentially. 100 a month into the Halifax Regular Saver, everything else into the Santander Mini 123 up to 2000, and when it goes past that point perhaps consider something like the Halifax Young Saver paying 2% as an overflow.

    Also, why not open a Barclays Children's Regular Saver paying 3.5%? You mentioned your son has 1800, plus an additional 50 a month, you could use the Mini 123 as a holding "reservoir" and use those funds, plus an additional injection of 50, to pay 100 a month to a Halifax Kids Regular Saver and 100 a month to Barclays Childrens Regular Saver. Repeat on a yearly basis using Santander to hold the funds plus accrued interest?

    Whatever happens, well done for realising 0.15% is daylight robbery and taking your (son's) money elsewhere.
    I work for a UK bank, but any comments made on this forum are solely my personal opinion. Caveat Emptor!
    • freaksaver
    • By freaksaver 8th Oct 17, 9:49 AM
    • 85 Posts
    • 4 Thanks
    • #5
    • 8th Oct 17, 9:49 AM
    Thank you
    • #5
    • 8th Oct 17, 9:49 AM
    Wow thanks all for responding so quickly. It felt like christmas this morning reading through your comments.

    I am a higher rate tax payer so I am trying to avoid saving in my name for them plus they are managing the accounts themselves (only 13 and 14 but I am trying to get them to see that although they can be small values it all mounts up).

    I didn't realise that there is 5% savings accounts out there for adults and I do have a lot of savings myself which are currently at 0.01% with Lloyds. Only reason being is that I have lots of things to track and having all my accounts with one bank means when I access my app for banking i can see everything all together but I know this comes at a high cost re the interest I could be earning. This is going to be my next mission to sort out!

    The boys have a one family stocks and shares ISA that they had when the government was giving free money to newborns years ago. I have never touched it through lack of understanding I suppose so they both have about 1000 each in that just sitting there. Should I be making better use of this then?

    Thanks Eco Miser for reassuring me about the %'s. It felt like the right thing to do but % are not my strong point.

    Flobberchops - as part of setting up the halifax regular for the boys they opened a young saver alongside it for the balance to xfer into after the year. I didn't even think to use it for the +2000 money which i wouldn't get an interested on. Thanks for that.

    I have tried to do a few calculations on the barclays account and I think the difference between having it in the Santander account at 3% compared to 3.5% in Barclays is about 3 per year. Still good money but I worry that if I have too many dates to remember I may end up struggling to keep track of what needs moving when.

    Seriously! If only there was one single bank you could trust to move your balances around to the best interest rate when your values in your accounts changed!! Now that's a service I would pay for :-)

    Honestly, I truly appreciate your support with this. Thank you sooooo much
    • Alexland
    • By Alexland 8th Oct 17, 12:54 PM
    • 2,592 Posts
    • 1,971 Thanks
    • #6
    • 8th Oct 17, 12:54 PM
    • #6
    • 8th Oct 17, 12:54 PM
    Glad to be of help.

    HSBC are currently offering 150 to switch your bank account and 50 if you stay a year which will get you access to their 5% regular saver where you can stash up to 250 per month.

    My wife made an error and didn't quite meet the transfer terms last time but after she queried why the 150 was taking so long then HSBC just happily paid her the 200 upfront anyway. I am currently transferring an account to HSBC for another 200 but I intend to meet the terms so will have to wait for the final 50 payment!

    Also Nationwide offer adult Flex Direct accounts where you can stash 2500 at 5% for a year and access to a 5% regular saver. They have a refer a friend offer where they pay you 100 each. I opened an account, recommend my wife for a switch (100 each) then she recommended me for a switch (100 each again).

    On the 1k from Gordon Brown (politicians can no longer kiss babies without the police investigating - or maybe it was his way of apologising after introducing tuition fees) in the S&S Junior ISAs it might be time to start de-risking it as the children approach 18. If they are likely to spend the money soon on education etc I would transfer them to Cash Junior ISAs while the market is still high. If they are unlikely to withdraw at 18 then it is probably best to keep invested but there are better providers than One Family if you want to make the time to learn about investment and have a view on their future goals.

    A spreadsheet is valuable for keeping track of account balances and dates. Remember to email it to yourself as a backup periodically.

    Last edited by Alexland; 08-10-2017 at 1:25 PM.
    • xylophone
    • By xylophone 8th Oct 17, 1:27 PM
    • 25,589 Posts
    • 15,116 Thanks
    • #7
    • 8th Oct 17, 1:27 PM
    • #7
    • 8th Oct 17, 1:27 PM
    The boys have a one family stocks and shares ISA that they had when the government was giving free money to newborns years ago.
    You mean that they each have a CTF?

    See links in post 2 here
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