On 4 November 2014, to an almost national sigh of relief, the Government published draft regulation changes that will finally allow transfers from Child Trust Funds (CTFs) to Junior ISAs (JISAs). The changes are expected to take effect from 6 April 2015, but the question is, will you take advantage of them?
Well, if the figures are anything to go by, perhaps you should. Moneyfacts has compared the remaining cash versions of CTFs with equivalent JISAs to see if they're worth transferring, and the results are in – JISAs offer far better value.
A quick look at the highest-paying CTFs compared with the top-rated JISAs shows just how much they vary, and the difference is marked. So doesn't it make sense to consider transferring?
Sylvia Waycot, editor at Moneyfacts.co.uk, said:
"CTFs have never been popular with banks or building societies, mainly due to the cost involved in setting them up compared with the often very small amounts of money invested in them. In fact, when CTFs were originally launched in 2005, only eight out of 117 providers that could have offered them did so.
"Today, the rates offered on CTFs are poor compared with JISAs. A child can earn as little as 1.10% from a Nationwide CTF and yet their sibling could get 3.25% with a JISA.
"Even higher rate CTFs aren't necessarily ideal. The highest-paying CTF from Yorkshire Building Society at 3% includes a bonus of 0.70% for 12 months. Most children can't remember where they put their bikes when they come out of a shop, so the chances of them remembering something in 12 months' time seems quite unlikely.
"The good news is that after years of being trapped in an account that never worked, the chains are about to be broken and any money saved can be transferred to a JISA, which at least offers some chance of a real return.
"Maybe it's time for cash CTFs to fade into non-existence, just like the rates have."
The rule that prevented CTFs from being transferred to JISAs has never been popular, particularly given the dramatic variation in rates, and if your child's savings are stuck in a poor-paying CTF you'll probably be relishing the chance to transfer. From next month, you can give your child the chance to build up a valuable savings pot that can earn real returns, so check out our best buy JISAs to see if it's worth transferring when the time comes – chances are, it will be.
Find the best junior ISA
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