Children’s saving accounts (since child trust funds were phased out)
A savings account? What’s that? *coughs* Money is something, I always seem to have very little of, however I do have savings accounts that I try my best to use! I have an online saver and a cash ISA. Hubs has a Cash ISA. We are both with Lloyds Bank. Bunny has a Child Trust Tund, but I really need to open a savings accountfor each of the twins.
In fact – The twins have money, they were given as gifts for their Christening, but it hasn’t been banked yet.
Because Child Trust Funds have been phased out (for children born after 2nd September 2011), and this fact baffled me for a long time! Child Trust Funds used to give you a choice, of a stakeholder account (this is what Bunny has), where funds were invested in low risk shares; or a non-stakeholder account, where money was simply saved. The government also used to give children a generous voucher, to start off their trust fund… but sadly no more!
So what now?
In the place of Child Trust Funds, you can now get a Junior Cash ISA. Similar to an adult cash ISA, you are able to save up to a certain amount of money each year, tax free (and risk free). You usually get paid a decent amount of interest on an ISA too. With a Junior cash ISA, the child is not allowed access to the money until they are 18 years old (and hopefully a responsible young adult).
A Junior Stocks and Shares ISA replaces the former stakeholder account. This type of account means your childs money is invested in low risk shares and dependant or share value – the balance of the childs account will rise or fall. There IS a level of risk with this account, however, the shares are in numerous different investments – your childs money is not all resting on one investment.
There is also a Young Saver Account – which had to be opened by an adult, but there is no upper yearly saving limit and money can be withdrawn (with parental consent) at any time in the child’s life. Some of the savings may be tax free, dependant on balance and circumstances. Limits are also placed on the amount of interest that cant be earnt, by money put in by relatives. This account turns to an Easy Saver when the child reaches 16 years old.
I really need to get around to sorting this for the twins as I think savings accounts are really important for children. It gives them a really good start in adult life, if they have something to start them on their journey into adulthood. Those few odd pounds you put in here and there, might mean a car, or a house deposit, by time your children are young adults!
(Please note, these account names are the ones used with Lloyds Bank – I can’t comment on similar products as I don’t use other banks.)
These are personal tips, from my own experience, not financial advice. Terms and Conditions of bank accounts change regularly – please check with the bank you wish to open an account with.