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Child Trust Funds

Child Trust Funds

Category: Savings

Updated: 16/10/2017
First Published: 11/01/2007

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

If you have a child born after 1 September 2002, you'll have been sent one of the Government's Child Trust Fund vouchers. The voucher (for £250) is sent out to all new babies in the UK. A further £250 voucher, will be sent when the child reaches the age of seven.

The vouchers must be used to open a Child Trust Fund account, and there are three types to choose from:

  1. a straightforward cash savings account,
  2. a stakeholder equity account (allowing your child to invest in a number of funds with charges no higher than 1.5%)
  3. a non-stakeholder equity account.

Whilst there have been over 2.5 million Child Trust Fund (CTF) accounts opened so far , there are still a quarter of vouchers issued that have not been invested by the parents who received them.

If you don't invest their voucher within 12 months of receiving it, then the Government will invest it on your behalf, which means it may not be invested in the type of account you would have wanted. You will still be able to transfer it back to an account of your choice, but will just involve you in a little more work.

So, if you have received a voucher and are not really sure what to do with it, remember that the longer it sits on the mantle piece, the more interest your son or daughter is losing out on.

Why not take a look at some of the best cash based Child Trust Funds deals currently available.

If you fell an equity based account may be a better option and want to find out a bit more, speak to an independent financial adviser who will explain the different options available, as well as any potential risks attached to such investments.

Find the best savings rates for your child - Compare savings accounts

Read our Changes to Child Trust Funds Guide

Download FREE Child Savings Plan brochures

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
 
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