National Savings & Investments (NS&I) is to withdraw children’s bonds from sale as it launches a new Junior Isa product.
The government-backed institution says it is reacting to changes in the marketplace by closing children’s bonds to new customers from September.
There are around 839,000 active children’s bonds and each account will remain open until its scheduled maturity date. All customers will be written to ahead of the maturity date to outline their options.
As part of these changes, NS&I’s has launched a new Junior Isa product paying a headline interest rate of 2%. The product is available immediately and must be opened online with a minimum deposit of £1.
The Junior Isa limit for the 2017/18 tax year is £4,128, and this can be paid in either as a lump sum or on a monthly basis.
You must be under 18 to open a Junior Isa but be aware that when your child reaches the age of 16 they can also open up a Cash Isa or a Help to Buy Isa as well. Once they reach 18 they’ll also be able to transfer their Junior Isa pot into an adult version.
NS&I acting retail director Jill Waters says: “Our new Junior ISA will also allow third-parties to deposit in to the product electronically, which means that grandparents and other relatives and friends of the child or family can add additional funds once the account has been opened.”
How does the NS&I Junior Isa compare?
NS&I’s new Junior Isa pays a headline rate of 2% and this can be easily beaten elsewhere. The Moneywise Best Buy is the Coventry Building Society Junior Cash Isa. This pays 3.25% to young savers and can be opened by post or in branch.
Alternatively, Darlington Building Society, Halifax, Nationwide, Tesco and TSB all pay 3%.
For more information, read Moneywise’s guide to the best Isas this week.