Best Deals on Child Savings Accounts
24/11/2008
Child savings accounts have been affected by the credit crunch just as much as standard savings accounts. The deals are getting harder to find, but some child savings accounts do offer good returns.
The Halifax, for example, is offering an interest rate of 10% on a one-year bond. Good deals are possible on instant-access accounts also. The Nottingham Building Society Branch Only Child saver is advertising an interest rate of 7.5% to regular savers until December 2009. The Chelsea Building Society pays 5.45% on any balance of more than £1, with higher interest rates available to those who make regular payments into the account.
Not only do children's savings accounts offer relatively good interest rates, they also come with tax advantages. If the parent completes a Form R85, the child's account will not incur the usual 20% tax that applies to all other savings accounts except ISAs.
Government-backed Child Trust Funds are how most parents start saving in their childrens' names. Every child born since September 2002 has received a £250 CTF voucher from the Government with an additional payment due at the age of seven. The parents can choose to invest the CTF or, if they do nothing, Revenue & Customs will invest it on the child's behalf. Parents are allowed to top-up CTFs by up to £1,200 a year. The best CTF deal on the market at the moment is the Hanley Economic Building Society, which pays 7.75% on a minimum investment of £250.
The Halifax, for example, is offering an interest rate of 10% on a one-year bond. Good deals are possible on instant-access accounts also. The Nottingham Building Society Branch Only Child saver is advertising an interest rate of 7.5% to regular savers until December 2009. The Chelsea Building Society pays 5.45% on any balance of more than £1, with higher interest rates available to those who make regular payments into the account.
Not only do children's savings accounts offer relatively good interest rates, they also come with tax advantages. If the parent completes a Form R85, the child's account will not incur the usual 20% tax that applies to all other savings accounts except ISAs.
Government-backed Child Trust Funds are how most parents start saving in their childrens' names. Every child born since September 2002 has received a £250 CTF voucher from the Government with an additional payment due at the age of seven. The parents can choose to invest the CTF or, if they do nothing, Revenue & Customs will invest it on the child's behalf. Parents are allowed to top-up CTFs by up to £1,200 a year. The best CTF deal on the market at the moment is the Hanley Economic Building Society, which pays 7.75% on a minimum investment of £250.
