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The top Child Trust Funds

Simon Ward
by Lovemoney Staff Simon Ward on 03 April 2013  |  Comments 4 comments

The free vouchers may have been abolished, but if you have a Child Trust Fund you should still shop around for the best product.

The top Child Trust Funds

There are over six million Child Trust Fund (CTF) accounts open, according to the latest figures from HM Revenues and Customs (HMRC).

This figure isn’t surprising, given that anyone who received a voucher for a child had an account opened for them automatically by HMRC if they didn’t do it themselves.

In this year's Budget, the Government bowed to pressure on allowing transfers from CTFs into Junior ISAs, which are generally paying higher rates (certainly in terms of cash accounts), by announcing a consultation into the move. Generally, and sadly unsurprisingly given the abolition of Child Trust Fund vouchers, it’s becoming harder to find really good Child Trust Funds.

And there was a further blow when CTF provider F&C announced that it was imposing an annual charge of £30 on its accounts, although you can switch your child's CTF somewhere else with no penalties.

Then and now

To illustrate how rates have fallen on CTFs, just three years ago the top rate for a cash CTF was 6.55%. If you want to transfer yours now, the best rate you’ll get is 3.05%. By way of comparison, the top cash Junior ISA pays 6%.

If you are keen to use CTFs as a way of providing money for your children when they reach adulthood, you definitely need to keep an eye on the market. Remember you can save up to £3,600 a year (£3,720 from 6th April). Or if you have an account that’s paying a lousy rate, why not switch?

To help you, we’ve rounded up the latest rates for cash accounts and some indicators of performance of share-based accounts.

Top cash Child Trust Funds

Below are the top-paying providers that will let you move your CTF to them.

Account

Interest rate

Bonus

Access

Furness BS Child Trust Fund

3.05%

None

Branch, post

Leeds BS Child Trust Fund

3.05%

1.25% bonus for two years, providing additional deposits of at least £600 are made in each of those two years

Branch, post

Yorkshire BS Child Trust Fund

3%

0.7% bonus for first 12 months account is open, afterwards rate reverts to 2.3%

Branch

Earl Shilton BS Child Trust Fund

2.85%

None

Branch, post

Skipton BS Child Trust Fund

2.65%

None

Branch, post

Monmouthshire BS Child Trust Fund

2.50%

None

Branch, online, post

Ipswich BS Child Trust Fund

2.40%

None

Branch, post

If you do want to stick with cash, you might want to take a look at this list of all the providers on the GOV.UK website and see if there is a Credit Union near you. Credit Unions are offering reasonable rates, for example Bridgend Lifesavers is paying 4%. Plus you’ll be helping to make money available to your local community.

Stakeholder and share-based Child Trust Funds

If you have a stakeholder or self-select (where you pick the investments) Child Trust Fund you can choose to move it elsewhere, either into cash or into another stakeholder or self-select CTF.

Disappointingly, most stakeholder CTF providers are charging the maximum 1.5% management fee they are allowed to. So it’s worth shopping around to see if you can cut costs there. Some also charge additional expenses, such as F&C's annual fee. Ask for a full breakdown of the charges when you're comparing.

And remember that the Child Trust Fund is, by its nature, a long-term investment, so past performance is no indicator of what might happen in the future.

This article is regularly updated

More on saving for children

How to save for your child's future

Top savings accounts for kids

The best Junior ISAs

Why you shouldn't save for your kids

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Comments (4)

  • The Bank Manager
    Love rating 79
    The Bank Manager said

    The institutions know that they are less likely to get the level of deposits they originally anticipated and since JISA's came into being, the number of CTF's that will be opened and receive additional deposits to those organisations, will similarly be lower.

    What's their incentive to provide a competitive rate? NONE!

    Report on 07 November 2012  |  Love thisLove  1 love
  • peter48
    Love rating 4
    peter48 said

    "Family Investments’ stakeholder CTF (which has 1.3 million accounts) has grown by just 1.4% over the past five years". That's sounds quite shocking & I think I would need to look into this. There must be tons of shares, investment trusts & funds paying more than that. Something looks odd.

    Report on 07 November 2012  |  Love thisLove  0 loves
  • geodrh
    Love rating 0
    geodrh said

    F&C are changing their Terms and Conditions to include a £25+VAT annual "account charge" from 6 Aptil 2013. This could be an annual charge of 10%! Are they legally allowed to do this? If so, what are my options?

    Report on 11 February 2013  |  Love thisLove  0 loves
  • 865251nw
    Love rating 0
    865251nw said

    F&C Investments are now proposing a £25+VAT annual account charge on my daughter's F&C Child Trust Fund Share account. This will destroy the entire original investment capital before she is old enough to withdraw any funds - if there's anything remaining!

    Report on 11 February 2013  |  Love thisLove  0 loves

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