Want to start an account for a baby - what product is best?

[milli2512]

DS is 3mths old and rather than buy presents for Xmas as he would know nothing about it I asked grandparents to give money instead so that we can open an account for him. My grandparents did this for me and it meant I had some money put aside for driving lessons etc when I was old enough.

We're not talking huge amounts of money - £50-100 at Xmas and Bdays and DH and I will put into it as and when we can. Ideally I wouldn't let DS have the money until he was 18 or possibly a bit older.

We bank with Nationwide and I was just looking online at the options for children. I'm not sure what would be best - savings account or ISA etc.

Does anyone have any advice or could share what option you went for if you've done something for your children?

TIA

I'd go for an ISA. It's tax free and depending on who you choose to go with, fairly competitive rates of interest.

An ISA would be suitable for the amounts that you are looking to pay in as well, (up to £5640.00 a year) but there are certain penalties for withdrawing.

You can move ISA's around as well, so if, say, in 5 years time the financial 'crisis' is over and X bank are offering a better interest rate - you can transfer the whole thing over.

Children don't pay tax on this sort of savings. Have a look on moneysavingexpert and compare children's accounts with ISA rates to see what's best. We have a stocks and shares isa in my name for the kids. Could be worth considering if you won't want to use it until DS is 18. We also have children's accounts for paying in birthday money.

I've got a Halifax 6% children's saver. You need to have a regular stading order into it, but this can be altered every month - up to £100. I put in £30 a month regularly but have altered the SO to allow for xmas money. It only lasts a year and then you have to start a new one from scratch, so after a year I will look for either an ISA or bond or something for the lump sum and then start another saver.