Could you help us find a decent home for our great-grandchildren’s savings? There seems to be little on offer for grandparents and great-grandparents saving for little ones.
My husband and I have opened a Nationwide Smart account for their savings, which we are happy with, but my daughter wants to put £2,000 aside for them somewhere it will earn a decent interest rate. None of us are interested in Junior Isas as we wish to retain control of the funds.
Have you any suggestions?
When setting up a savings account for a child, frustratingly the account will often need to be opened by a parent or guardian, although different providers will have different rules about the relationship that the child and the adult must have.
Nationwide is still paying one of the best rates available for a lump sum deposit, especially if there is unlikely to be more than one withdrawal made each year. Its new Future Saver allows a maximum deposit of £5,000 a year. If the adult holds a qualifying current account with Nationwide, the rate earned will be 3.50% gross/AER. If the adult does not hold a qualifying current account, the rate earned will be 2.50%. In both cases, if more than one withdrawal is made a year, the rate will drop to 0.50% for the remainder of the calendar year. However, this account does need to be opened by a parent or guardian.
If you want to manage the account on behalf of your great-grandchildren, then, of the best paying accounts, Virgin Money and Halifax both allow this. Although Halifax states that it will need parents’ authorisation – it will request this. Both providers will need to see a birth certificate.
The Virgin Young Saver Issue 5 is available for children aged from birth to 15 and is an easy-access account paying 2.25% on balances of £1 to £25,000.
The Halifax Kids’ Saver is paying 2% on balances of between £1 and £5,000. It can be held until the child is 16, at which point it is transferred to the Everyday Saver account that currently pays just 0.20%.
Best Buy children’s savings accounts
|Account type||Provider||Account name||Minimum||Maximum||AER|
|Easy access||Santander||1|2|3 Mini Current Account||£100||£2,000||up to 3%|
|Virgin Money||Young Saver Issue 5||£1||£25,000||2.25%|
|Restricted access||Nationwide||Future Saver||£1||£5,000 a year||3.50% to 2.50% if you are not a current account holder|
|Regular saver||Halifax||Kids' Monthly Saver||£10||£1,200||4.50%|
|Saffron Building Society||Children's Regular Saver||£5||£1,200||4%|
|Junior Isa||Coventry Building Society||Junior Cash Isa (1)||£1||Jisa allowance||3.60%|
|Darlington Building Society||Junior Cash Isa||£1||Jisa allowance||3.25%|
Rates correct as at 16 November 2018. Source: Moneywise.co.uk