moneysupermarket.com comments on Child Trust Fund (CTF) week

Commenting on Child Trust Fund (CTF) week Stuart Glendinning, managing director at moneysupermarket.com, said: “The Government’s latest Child Trust Fund initiative, CTF week, draws much-needed attention to the need to develop saving as a lifelong habit, and encourage people to manage their family’s finances carefully.

“With a £250 payment at birth, followed by an additional £250 (or £500 for low income families) on the child’s seventh birthday, parents are really missing out if they do not choose the best home for the Government’s ‘gift’ of ‘free money’.

“However, the most effective CTF investment is one that is topped up by parents, grandparents or other relatives. Family top-ups can really make the difference in creating a substantial savings pot.

“Based on an investment into the best cash CTF currently available, the Hanley Economic Building Society CTF account paying 6.55 per cent AER, and using the initial £250 voucher, with monthly top-ups of £100, plus the additional £250 at age seven, a child’s investment could grow to £38,048.35 over 18 years.

“For those looking for a high street option, Yorkshire Building Society currently offers 6.55 per cent AER for a year, followed by 5.85 per cent AER. Based on the same scenario as above, a child’s investment could grow to £35,608.42

“As with all savings accounts parents would be wise to shop around and once invested, keep an eye on the CTF account rate. If the rate wilts, the balance should be switched to a better rate - although admittedly there is not a great many cash accounts to choose from.”